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, 2008

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 Select Market
Preferred Share Purchase Rights

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: 99,945,778 shares common stock, par value $0.001, outstanding as of February 17, 2009. The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant as of June 30, 2008 was $2,875.1 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 12, 2009, are incorporated by reference into Part III.

BIOMARIN PHARMACEUTICAL INC.

2008 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

Part I
Item 1.	Description of Business	1
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	32
Item 2.	Properties	32
Item 3.	Legal Proceedings	33
Item 4.	Submission of Matters to a Vote of Security-Holders	33
Part II
Item 5.	Market for Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities	34
Item 6.	Selected Consolidated Financial Data	36
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 7A.	Quantitative and Qualitative Disclosure About Market Risk	57
Item 8.	Financial Statements and Supplementary Data	59
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	59
Item 9A.	Controls and Procedures	59
Item 9B.	Other Information	60
Part III
Item 10.	Directors and Executive Officers of the Registrant	62
Item 11.	Executive Compensation	62
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	62
Item 13.	Certain Relationships and Related Transactions and Director Independence	62
Item 14.	Principal Accounting Fees and Services	62
Part IV
Item 15.	Exhibits and Financial Statement Schedules	62
SIGNATURES		68

BioMarin^®, Naglazyme^® and Kuvan^® 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. Riquent^® is a registered trademark of La Jolla Pharmaceutical Company. All other brand names and service marks, trademarks and other trade names appearing in this report are the property of their respective owners.

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,” “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. 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) tablets and Aldurazyme (laronidase).

We are conducting clinical trials on several investigational product candidates for the treatment of genetic diseases including: PEG-PAL, an enzyme substitution therapy for the treatment of phenylketonurics that are not responsive to Kuvan. We expect to start clinical trials of GALNS, an enzyme replacement therapy for the treatment of Mucopolysaccharidosis Type IV or Morquio Syndrome Type A (MPS IV A), a lysosomal storage disease, in the first half of 2009. We are also developing 6R-BH4, the active ingredient in Kuvan, for the treatment of multiple cardiovascular indications, including sickle cell disease.

We are conducting preclinical development of several other enzyme product candidates for genetic and other diseases, including a small molecule for the treatment of Duchenne muscular dystrophy.

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A summary of our various commercial products and development programs, including key metrics as of December 31, 2008, is provided below:

Program	Indication	Orphan Drug Designation	Stage	2008 Total Net Product Revenues (in millions)		2008 Research & Development Expense (in millions)
Naglazyme	MPS VI	Yes	Approved	$	132.7	$	9.6
Aldurazyme (1)	MPS I	Yes	Approved	$	72.5	$	1.6
Kuvan	PKU	Yes	Approved	$	46.7	$	10.8
6R-BH4	Cardiovascular Indications	Not yet determined	Clinical		N/A	$	14.7
PEG-PAL	PKU	Yes	Clinical		N/A	$	11.0
GALNS for Morquio Syndrome Type A	MPS IVA	Not yet determined	Clinical—First half of 2009		N/A	$	12.6

(1) The Aldurazyme total product revenue noted above is the total product revenue recognized by us in accordance with the terms of our restructured agreement with Genzyme Corporation (Genzyme). See “Commercial Products—Aldurazyme” below for further discussion.

Recent Developments

In February 2009, we announced the results from our Phase 2 multi-center, randomized, double-blind, placebo-controlled clinical study of 6R-BH4 in patients with symptomatic peripheral arterial disease (PAD). The Phase 2 multi-center, randomized, double-blind, placebo-controlled study enrolled 190 subjects and was conducted at 31 sites in the U.S. and Argentina. 161 patients completed the study. The primary objective of the study was to evaluate mean changes in peak walking time (PWT) from baseline to week 24. The secondary objective of the study was to evaluate the mean change in claudication onset time from baseline to week 24. The primary endpoint of the study, peak walking time (PWT), did not show a significant difference between 6R-BH4 and placebo, and the secondary endpoint, claudication onset time, also did not show a difference. 6R-BH4 was well tolerated in peripheral arterial disease patients and had a safety profile similar to previous studies. We are currently evaluating the impact of these results on our overall BH4 development program.

BioMarin/La Jolla Pharmaceutical Company Development and Commercialization Agreement for Riquent

On January 6, 2009, we announced that we entered into an agreement with La Jolla Pharmaceutical Company (La Jolla) to develop and commercialize Riquent^®, La Jolla’s investigational drug for lupus nephritis, in the U.S., Europe and all other territories of the world, excluding the Asia Pacific region. Riquent was being evaluated by La Jolla in an international double blind, placebo controlled randomized Phase 3 clinical study referred to as the “Phase 3 ASPEN study,” which was designed to demonstrate that Riquent treatment delays the time to renal flare and reduced proteinuria in patients with lupus renal disease. On February 12, 2009. The Independent Data Monitoring Board determined that the continuation of the trial was futile. Based on the results of the interim analysis, we and La Jolla have decided to stop the study, unblind the data and evaluate the clinical results, including secondary end points.

On January 19, 2009, we paid La Jolla a cash payment of $7.5 million and on January 20, 2009, we purchased 339,104 preferred shares of La Jolla’s Series B Preferred Stock at a price per share of $22.12, for $7.5 million. The preferred shares are initially convertible at a rate of thirty shares of common stock for every one preferred share. This is equivalent to a common stock purchase price of $0.74, a 20% premium to the average closing price for La Jolla’s common stock over the 20 trading days prior to January 4, 2009.

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Kuvan Marketing Approval in the European Union

On December 9, 2008, we announced that our partner Merck Serono, a division of Merck KGaA (Darmstadt, Germany), received marketing approval for Kuvan for the treatment of hyperphenylalaninemia (HPA) in phenylketonuria (PKU) or BH4 deficient patients from the European Commission, or the EC. In the fourth quarter of 2008, we earned a milestone payment from Merck Serono of $30.0 million, which was paid in January 2009, for this marketing approval and will receive royalties on net sales of Kuvan in the E.U.

Initiation of Clinical Assessment Program for Morquio A Syndrome

On November 3, 2008, we announced the initiation of the Morquio Clinical Assessment Program for patients with MPS IVA. We expect to initiate a Phase 1b clinical trial of the experimental enzyme replacement therapy in the first half of 2009.

Positive Phase 2a Clinical Study Results of 6R-BH4 in Patients in Sickle Cell Disease

On October 15, 2008, we announced results from our Phase 2a multi-center, open-label, dose-escalation clinical study of 6R-BH4 in patients with sickle cell disease designed to evaluate whether 6R-BH4 can improve the endothelial dysfunction observed in sickle cell disease patients. Oral administration of 6R-BH4 was associated with an improvement in endothelial dysfunction in sickle cell disease patients. We are currently in the process of determining whether we will proceed with additional clinical development of 6R-BH4 for sickle cell disease. We expect to make the decision in the second quarter of 2009.

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 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 2008 totaled $132.7 million, as compared to $86.2 million for 2007. Naglazyme net product sales for 2006 were $46.5 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 confers seven years of market exclusivity in the U.S for the treatment of PKU, expiring

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in 2014. Kuvan net product sales for 2008 were $46.7 million. Kuvan net product sales for 2007 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, which 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 period critical to ensuring 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 July 2008, we announced that Asubio Pharma Co., Ltd. (a subsidiary of Daiichi Sankyo), received marketing approval from the Japanese Ministry of Health, Labour and Welfare for a label extension of Biopten (sapropterin dihydrochloride), which contains the same active ingredient as Kuvan in the U.S., for the treatment of patients with PKU. We received a milestone payment of $1.5 million for this marketing approval and will receive double-digit royalties on net sales of Biopten for the PKU indication in Japan under an exclusive license that we entered into with Asubio in September 2007 of data and intellectual property contained in the Kuvan new drug application.

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 have shared equally all development costs following successful completion of Phase 2 clinical trials for each product candidate in each indication. On December 9, 2008, we announced that Merck Serono had received marketing approval in the E.U. for Kuvan for the treatment of PKU. We earned a $30.0 million milestone payment from Merck Serono in the fourth quarter of 2008 as a result of the approval of Kuvan in the E.U. The commercial launch of Kuvan in the E.U. is expected in the first half of 2009. Over the next several years, we expect to receive from Merck Serono a net royalty of approximately 4% on net sales of Kuvan in the E.U. We recorded collaborative agreement revenue associated with Kuvan in the amounts of $38.9 million in 2008, $28.3 million in 2007 and $18.7 million in 2006.

Aldurazyme

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

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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 in January 2008, as discussed below, 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.

On January 3, 2008, we announced the restructuring of our relationship with Genzyme, regarding the manufacturing, marketing and sale of Aldurazyme. Under the revised structure, the operational responsibilities for Genzyme and us did not significantly change; however, the restructured terms allows for each party to have control over its own operational responsibilities, without the need to obtain the approval of the other party. Further, each party will realize 100% of the benefit of their own increased operational efficiencies, thus creating incentives for each party to identify and implement cost saving measures. Under the previous 50/50 structure, each company shared 50% of the expense associated with the other’s inefficiencies and only received 50% of the benefit of its own efficiencies. Specifically, we will be able to realize the full benefit of any manufacturing cost reductions and Genzyme will be able to realize the full benefit of any sales and marketing efficiencies. As part of this restructuring, we entered into a number of agreements (the Restructuring Agreements) with Genzyme and the joint venture limited liability company founded by Genzyme and BioMarin (the LLC). Effective January 1, 2008, we entered into a Manufacturing, Marketing and Sales Agreement with Genzyme and the LLC. Genzyme continues 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.

Effective January 1, 2008, Genzyme, the LLC and we also amended and restated our Collaboration Agreement. The LLC no longer engages in commercial activities related to Aldurazyme and its sole activities are to (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.

However, as part of the restructuring of our relationship with Genzyme, beginning in January 2008, Genzyme will record sales of Aldurazyme and is required to pay us, on a quarterly basis, a 39.5 to 50% royalty on worldwide net product sales. In addition, we recognize product transfer revenue when product is released to

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Genzyme and all of our obligations have been fulfilled. Genzyme’s return rights for Aldurazyme are limited to defective product. The product transfer revenue represents the fixed amount per unit of Aldurazyme that Genzyme is required to pay us if the product is unsold by Genzyme. The amount of product transfer revenue will eventually be deducted from the calculated royalty rate when the product is sold by Genzyme.

Aldurazyme net product revenues of $72.5 million for 2008 include $60.1 million of royalty revenue on net Aldurazyme sales by Genzyme. Royalty revenue from Genzyme is based on 39.5%—42.0% of net Aldurazyme sales by Genzyme, which totaled $151.3 million for 2008. Incremental Aldurazyme net product transfer revenue of $12.4 million for 2008 reflects incremental shipments of Aldurazyme to Genzyme to meet future product demand. In January 2008, we transferred existing finished goods on-hand to Genzyme under the restructured terms of the BioMarin/Genzyme LLC agreements, resulting in the recognition of significant incremental product transfer revenue during 2008. In the future, to the extent that Genzyme Aldurazyme inventory quantities on hand remain consistent, we expect that our total Aldurazyme revenues will approximate the 39.5% to 50% royalties on net product sales by Genzyme.

Products in Clinical Development

PEG-PAL is an investigational enzyme substitution therapy. It is being developed as a subcutaneous injection and is intended for those patients with PKU that 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. In May 2008, we initiated a Phase 1 open-label, single-dose, dose-escalation clinical trial of PEG-PAL for PKU. The primary objective of the study is to assess the safety and tolerability of a single, subcutaneous injection of PEG-PAL in patients with PKU that do not respond to Kuvan. The secondary objectives of the study are to evaluate the pharmacokinetics of single, subcutaneous injections of PEG-PAL administered at escalating doses and to evaluate the effect of PEG-PAL on Phe concentrations in subjects with PKU. We expect clinical trial results in the first half of 2009, depending on trial enrollment rates.

During 2007 and the first part of 2008, we devoted significant resources to 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 was a 24-week, multi-center, double-blind, placebo-controlled study. We released results from the Phase 2 clinical trial in February 2009. 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 announced results from this Phase 2 clinical trial in October 2008. We are currently in the process of determining whether we will proceed with additional clinical development of 6R-BH4 for other indications. We expect to make this decision in the second quarter of 2009.

We are also developing GALNS, an enzyme substitution therapy for the treatment of MPS IV A. On November 3, 2008, we announced the initiation of the Morquio Clinical Assessment Program for patients with MSP IVA Syndrome and expect to initiate a Phase 1b clinical trial of GALNS in the first half of 2009.

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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 U.S. Food and Drug Administration (FDA), or the EC and health agencies in other countries for the commercial production of Aldurazyme and 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 third-party logistics companies to store and distribute Naglazyme and Kuvan.

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 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 “Commercial Products-Aldurazyme” for information regarding the restructuring of our relationship with Genzyme.

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Customers

Our Naglazyme and Kuvan 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 distributors and to certain larger pharmaceutical wholesalers, which act as intermediaries between us and end-users and generally do not stock quantities of Naglazyme. During 2008, 68% of our net Naglazyme and Kuvan product revenues were generated by six customers. Genzyme is our sole customer for Aldurazyme and is responsible for marketing and selling Aldurazyme to third parties.

Despite the significant concentration of customers, the demand for Naglazyme and Kuvan is driven primarily by patient therapy requirements and we are not dependent upon any individual distributor with respect to Naglazyme or Kuvan sales. Due to the pricing of Naglazyme and Kuvan 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.

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, Aldurazyme and GALNS for Morquio Syndrome Type A (MPS IV A)

We know of no active competitive program for enzyme replacement therapy for MPS VI, MPS I, or MPS IV A that has entered clinical trials. However, we know of one other company that has a preclinical competitive product for MPS IV A. It is our understanding that this company has suspended its development efforts for technical and financial reasons.

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, MPS I, or MPS IV A.

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 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

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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 252, including approximately 42 patents issued by the U.S. Patent and Trademark Office (USPTO). Furthermore, our portfolio of pending patent applications totals approximately 384 applications, including approximately 23 pending U.S. applications.

With respect to Naglazyme, we have five issued patents including a U.S. 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 19 issued patents, including six U.S. 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.

Three U.S. patents on alpha-L-iduronidase are owned by an affiliate of Women’s and Children’s Hospital Adelaide. We 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. After a failure to timely file a court challenge to the Japanese Board of Appeals’ decision upholding the final rejection of all claims in the corresponding Japanese application, the Japanese application has also lapsed and cannot be re-filed. 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

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venture with Genzyme to market Aldurazyme with commercial diligence, in order to provide MPS I patients with the benefits of 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 re-filed.

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 or FDC Act, the Medicaid rebate program, the Veterans Health Care Act of 1992, and the Occupational Safety and Health Act, among others.

The FDC 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 FDA. 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 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

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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 the 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 FDA has 60 days from its receipt of an 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 NDAs. 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, 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 or cGMPs, 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 two or six 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

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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 or FDA approved method of using this 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 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.

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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 drug 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 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 that the FDA 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.

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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.

Section 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) NDA 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 Section 505(b)(2) NDA can be delayed 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) NDA 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 post market 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, or DTC advertisements.

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The FDAAA also reauthorized and amended the 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 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 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 6, 2009, we had 649 full-time employees, 287 of whom are in operations, 181 of whom are in research and development, 101 of whom are in sales and marketing and 80 of whom are in administration.

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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.

Research and Development

For information regarding research and development expenses incurred during 2006, 2007 and 2008 see Item 7, “Management Discussion and Analysis of Financial Condition and Results of Operations—Research and Development”.

Geographic Area Financial Information

Our chief operating decision makers (i.e., chief executive officer, certain of his direct reports and our board of directors) review financial information on a consolidated basis, for the purposes of allocating resources and evaluating financial performance. There are no segment managers who are held accountable by the chief operating decision makers, or anyone else, for operations, operating results and planning for levels or components below the consolidated unit level. Accordingly, we consider ourselves to have a single reporting segment and operating unit structure.

Net product revenues by geography are based on patients’ locations for Naglazyme and Kuvan, and are based on Genzyme’s U.S. location for Aldurazyme. The following table outlines revenues and long-lived assets by geographic area (in thousands):

	Year Ended December 31,
	2006		2007		2008
Net product revenues:
United States	$	18,593	$	18,072	$	140,418
Europe		27,932		51,878		63,333
Latin America		496		6,409		25,250
Rest of the World		2,585		10,443		22,850
Total net product revenues	$	49,606	$	86,802	$	251,851

	Year Ended December 31,
	2007		2008
Long-lived assets:
United States	$	126,550	$	167,644
International		890		1,355
Total long-lived assets	$	127,440	$	168,999

Other Information

We were incorporated in Delaware in October 1996 and began operations on March 21, 1997. 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.

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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 until 2008. Although we were profitable during 2008, based on our current business plans, we expect to operate at an annual net loss for 2009 and possibly beyond. 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.

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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, 2008 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 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 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, the results in humans may be significantly different. After we have conducted preclinical studies, 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

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a drug intended to treat a rare disease or condition, defined as a patient population of fewer 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 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 particular 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, Aldurazyme and Kuvan have received regulatory approval to be commercially marketed and sold in the U.S., E.U. and other countries. 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 regulatory requirements or unexpected safety issues. Further, the government authorities may condition approval of our product candidates

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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 the patient. 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, the value of our company and our operating results will be adversely affected. Additionally, 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.

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 Naglazyme, 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 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 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, malfunctions of internal information technology systems, and other events that cannot always be prevented or anticipated. 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.

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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.

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. Further, the availability of suitable contract manufacturing capacity at scheduled or optimum times is not certain.

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.

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 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 and our risk mitigation plans, 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 harm our business by reducing 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 and manufacturing expenses.

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

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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), which provides 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.

As a result of the passage of the MMA, aged and disabled patients jointly eligible for Medicare and Medicaid 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

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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. As part of these cost containment measures, some countries have imposed or threatened to impose revenue caps limiting the annual volume of sales of Naglazyme. To the extent that these caps are significantly below actual demand, our future revenues and gross margins may be adversely affected.

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.

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 PhRMA Code on Interactions with Healthcare Professionals.

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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 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.

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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 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.

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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 Women’s and Children’s Hospital Adelaide 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. The corresponding Japanese application was finally rejected by the Japanese Board of Appeals and the application, also lapsed after failure to timely file a court challenge, and cannot be re-filed. 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 arise in that country.)

If our Manufacturing, Marketing and Sales Agreement with Genzyme were terminated, we could be barred from commercializing Aldurazyme or our ability to successfully commercialize Aldurazyme would be delayed or diminished.

Either party may terminate the Manufacturing, Marketing and Sales Agreement (MMS Agreement) between Genzyme and us related to Aldurazyme for specified reasons, including if the other party is in 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 party declared bankruptcy, the terminating party would be obligated to buy out the other party 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

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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 party 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 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 or 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. Our future success will depend, in part, on our ability to identify additional opportunities and to successfully enter into partnering or acquisition agreements for those opportunities. If our competitors successfully enter into partnering arrangements

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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 genetic diseases. These companies, including Genzyme, 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 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 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 our senior executive officers’ 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 any of MPS I, MPS VI or PKU. In order to continue development and marketing of 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.

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

Even if our drug products are approved, 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 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 business is affected by macroeconomic conditions.

Various macroeconomic factors could adversely affect our business and the results of our operations and financial condition, including changes in inflation, interest rates and foreign currency exchange rates and overall economic conditions and uncertainties, including those resulting from the current and future conditions in the global financial markets. For instance, if inflation or other factors were to significantly increase our business costs, it may not be feasible to pass through price increases on to our customers due to the process by which health care providers are reimbursed for our products by the government. Interest rates, the liquidity of the credit markets and the volatility of the capital markets could also affect the value of our investments and our ability to liquidate our investments in order to fund our operations. We purchase or enter into a variety of transactions, including investments in commercial paper, the extension of credit to corporations, institutions and governments and enter into hedging contracts. If any of the issuers or counter parties to these instruments were to default on their obligations, it could materially reduce the value of the transaction and adversely affect our cash flows.

Interest rates and the ability to access credit markets could also adversely affect the ability of our customers/distributors to purchase, pay for and effectively distribute our products. Similarly, these macroeconomic factors could affect the ability of our contract manufacturers, sole-source or single-source suppliers to remain in business or otherwise manufacture or supply product. Failure by any of them to remain a going concern could affect our ability to manufacture products.

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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 the Nasdaq Global Select Market. Listing on the exchange 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. In addition, the current decline in the financial markets and related factors beyond our control, including the credit and mortgage crisis in the U.S. and worldwide, may cause our stock price to decline rapidly and unexpectedly.

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

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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. Our board of directors approved an additional amendment to the stockholder rights plan in February 2009. 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.

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	2009-2019
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, finance, administration, and laboratory	NA: owned property
Sierra Point Parkway facility, Brisbane, California	20,000	Biostatistics and office	2011

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 Turkey. During 2009 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,

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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, 2008.

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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 the Nasdaq Global Select Market. The following table sets forth the range of high and low quarterly closing sales prices for our common stock for the periods noted, as reported by Nasdaq.

		Prices
Year	Period	High		Low
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
2008	First Quarter	$	40.39	$	31.90
2008	Second Quarter	$	39.72	$	28.92
2008	Third Quarter	$	32.55	$	25.60
2008	Fourth Quarter	$	26.29	$	13.59

On February 17, 2009, the last reported sale price on the Nasdaq Global Select Market for our common stock was $18.11. 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 2009 annual meeting of stockholders.

Issuer Purchase of Equity Securities

We did not make any purchases of our common stock during the year ended December 31, 2008.

Holders

As of February 17, 2009, there were 70 holders of record of 99,945,778 outstanding shares of our common stock. Additionally, on such date, options to acquire 12,223,016 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 shows the value of an investment of $100 on December 31, 2003 in BioMarin common stock, the Nasdaq Composite Index (U.S.) and the Nasdaq Biotechnology Index. All values assume reinvestment of the pretax value of dividends paid by companies included in these indices and are calculated as of December 31 of each year. Our common stock is traded on the Nasdaq Global Select 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.

	12/31/03	12/31/04	12/31/05	12/31/06	12/31/07	12/31/08
BioMarin Pharmaceutical Inc.	100.00	82.35	138.92	211.21	456.19	229.38
NASDAQ Composite	100.00	110.06	112.92	126.61	138.33	80.65
NASDAQ Biotechnology	100.00	112.17	130.53	130.05	132.24	122.10

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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 consolidated statement of operations data for the years ended December 31, 2004, 2005, 2006, 2007, and 2008 and consolidated balance sheet data as of December 31, 2004, 2005, 2006, 2007, and 2008 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)
	2004			2005			2006			2007			2008
Consolidated statements of operations data:
Revenues:
Net product revenues	$	18,641		$	13,039		$	49,606		$	86,802		$	251,851
Collaborative agreement revenues		—			12,630			18,740			28,264			38,907
Royalty and license revenues		—			—			15,863			6,515			5,735
Total revenues		18,641			25,669			84,209			121,581			296,493
Operating expenses:
Cost of sales		3,953			2,629			8,740			18,359			52,509
Research and development		49,784			56,391			66,735			78,600			93,291
Selling, general and administrative		37,606			41,556			48,507			77,539			106,566
Amortization of acquired intangible assets		3,987			1,144			3,651			4,371			4,371
Acquired in-process research and development		31,453			—			—			—			—
Impairment of acquired intangible assets		68,251			—			—			—			—
Total operating expenses		195,034			101,720			127,633			178,869			256,737
Income (loss) from operations		(176,393	)		(76,051	)		(43,424	)		(57,288	)		39,756
Equity in the income (loss) of BioMarin/Genzyme LLC		(2,972	)		11,838			19,274			30,525			(2,270	)
Interest income		2,466			1,861			12,417			25,932			16,388
Interest expense		(10,544	)		(11,918	)		(13,411	)		(14,243	)		(16,394	)
Debt conversion expense		—			—			(3,315	)		—			—
Impairment loss on investment		—			—			—			—			(4,056	)
Net income (loss) before income taxes		(187,443	)		(74,270	)		(28,459	)		(15,074	)		33,424
Provision for income taxes		—			—			74			729			2,593
Net income (loss)	$	(187,443	)	$	(74,270	)	$	(28,533	)	$	(15,803	)	$	30,831
Net income (loss) per share, basic	$	(2.91	)	$	(1.08	)	$	(0.34	)	$	(0.16	)	$	0.31
Net income (loss) per share, diluted	$	(2.91	)	$	(1.08	)	$	(0.34	)	$	(0.16	)	$	0.29
Weighted average common shares outstanding, basic		64,354			68,830			84,582			95,878			98,975
Weighted average common shares outstanding, diluted		64,354			68,830			84,582			95,878			103,572

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	December 31, (in thousands)
	2004			2005			2006		2007		2008
Consolidated balance sheet data:
Cash, cash equivalents and short-term investments	$	48,815		$	47,792		$	288,847	$	585,594	$	559,792
Total current assets		85,159			68,941			334,224		644,297		737,696
Total assets		232,966			195,303			463,436		815,279		906,695
Long-term liabilities, net of current portion		230,890			232,398			299,589		566,010		499,939
Total stockholders’ equity (deficit)		(67,978	)		(77,462	)		117,802		187,726		276,675

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. Our 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)
2008:
Total revenue	$	60,396		$	64,174		$	72,646		$	99,277
Net income		1,686			3,810			829			24,506
Net income per share, basic		0.02			0.04			0.01			0.25
Net income per share, diluted		0.02			0.04			0.01			0.21
2007:
Total revenue	$	22,838		$	28,884		$	25,006		$	44,853
Net income (loss)		(9,293	)		(3,864	)		(5,216	)		2,570
Net income (loss) per share, basic		(0.10	)		(0.04	)		(0.05	)		0.03
Net income (loss) income per share, diluted		(0.10	)		(0.04	)		(0.05	)		0.03

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

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 “Overview,” 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” 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 notes to those statements included elsewhere in this Annual Report on Form 10-K.

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.

Naglazyme received marketing approval in the U.S. in May 2005, in the E.U. in January 2006, and subsequently in other countries. Naglazyme net product revenues for 2007 totaled $86.2 million and increased to $132.7 million for 2008.

Aldurazyme has been approved for marketing in the U.S., E.U., and in other countries. Prior to 2008, we developed and commercialized Aldurazyme through a joint venture with Genzyme. Effective January 2008, we restructured our relationship with Genzyme whereby Genzyme sells Aldurazyme to third parties and we recognize royalty revenue on net sales by Genzyme. We recognize a portion of the royalty as product transfer revenue when product is released to Genzyme and all obligations related to the transfer have been fulfilled. The product transfer revenue represents the fixed amount per unit of Aldurazyme that Genzyme is required to pay us if the product is unsold by Genzyme. The amount of product transfer revenue will eventually be deducted from the calculated royalties earned when the product is sold by Genzyme. Our Aldurazyme net product revenue for 2008 totaled $72.5 million.

Kuvan was granted marketing approval in the U.S. in December 2007 and in the E.U. in December 2008. Kuvan net product revenues for 2007 and 2008 totaled $0.4 million and $46.7 million, respectively.

We are developing PEG-PAL, an experimental enzyme substitution therapy for the treatment of PKU, for patients that are not responsive to Kuvan. In May 2008, we initiated a Phase 1 clinical trial of PEG-PAL in PKU patients. We expect to complete this 35 patient, open label study in the first half of 2009. The primary objective of this study is to assess the safety and tolerability of single subcutaneous injections of PEG-PAL in subjects with PKU. In 2007 and early 2008 we devoted substantial resources to the development of 6R-BH4, the active ingredient in Kuvan, for the treatment of certain cardiovascular indications including peripheral arterial disease and sickle cell disease. We released data from several 6R-BH4 trials in early February 2009. We expect to start

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clinical trails of GALNS, an enzyme replacement therapy for the treatment of MPS IVA, in the first half of 2009. We are conducting preclinical development of several other enzyme product candidates for genetic and other diseases, and a small molecule for the treatment of Duchenne muscular dystrophy.

Key components of our results of operations for the years ended December 31, 2006, 2007 and 2008, include the following:

	2006			2007			2008
Total net product revenues	$	49,606		$	86,802		$	251,851
Collaborative agreement revenues		18,740			28,264			38,907
Cost of sales		8,740			18,359			52,509
Research and development expense		66,735			78,600			93,291
Selling, general and administrative expense		48,507			77,539			106,566
Net income (loss)		(28,533	)		(15,803	)		30,831
Stock-based compensation expense		9,590			18,283			25,250

See “Results of Operations” for discussion of the detailed components and analysis of the amounts above. Our cash, cash equivalents, and short-term investments totaled $559.8 million as of December 31, 2008 compared to $585.6 million as of December 31, 2007.

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 income (loss), as well as on the value of certain assets and liabilities on our consolidated balance sheets. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. On a regular basis, we evaluate our assumptions, judgments and estimates and make changes accordingly. Unless otherwise noted below, there have not been any recent changes to our assumptions, judgments or estimates included in our critical accounting policies. We believe that the assumptions, judgments and estimates involved in the accounting for the impairment of long-lived assets, revenue recognition and related reserves, income taxes, inventory, research and development and stock option plans have the greatest potential impact on our consolidated financial statements, so we consider these to be our critical accounting policies. Historically, our assumptions, 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, equity investment in Summit Corporation plc (Summit), property, plant and equipment, intangible assets and goodwill and, as of January 2009, an equity investment in La Jolla. We regularly review long-lived assets for impairment. The recoverability of goodwill and our equity investments in Summit and La Jolla are measured by available external market data, including quoted prices on public stock exchanges, and other relevant information. 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.

The recoverability of long-lived assets, other than goodwill and our equity investments in Summit and La Jolla, are measured by comparing the asset’s carrying amount to the expected undiscounted future cash flows that the asset is expected to generate.

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

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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 Statement Financial Accounting Standard No. (SFAS) 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 unless facts and circumstances warrant a review of goodwill for impairment before that time. No triggering events occurred during 2008 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.

As a result of the restructuring of our joint venture with Genzyme, we have realized most of our investment in the joint venture 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’s cash on hand to fund certain research and development activities related to Aldurazyme and intellectual property management.

In 2008, we recorded an other-than-temporary impairment charge of $4.1 million for the decline in the value of our equity investment in Summit. The determination that the decline was other-than-temporary is, in part, subjective and influenced by several factors including, the length of time and the extent to which the market value of the shares had been less than the value at the time of purchase, Summit’s financial condition and near-term prospects, including any events which may influence their operations, and our intent and ability to hold the investment for a period of time sufficient to allow for the anticipated recovery in market value. Based on the current market conditions, the low volume of trading in Summit securities and their current financial condition, we determined that our investment in Summit was other-than-temporarily impaired as of year end and adjusted the amount of our investment to the stock’s market price on December 31, 2008.

The recoverability of the carrying value of buildings, leasehold improvements for our facilities and equipment 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 No. 104 (SAB 104) Revenue Recognition, and Emerging Issues Task Force (EITF) Issue No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. Our revenues consist of net product revenues from Naglazyme and Orapred during 2006, Naglazyme and Kuvan product sales during 2007 and 2008, Aldurazyme product transfer and royalty revenues starting January 1, 2008, revenues from our collaborative agreement with Merck Serono and other license and royalty revenues. Milestone payments are recognized in full when the related milestone performance goal is achieved and we have no future performance obligations related to the payment.

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Naglazyme and Kuvan product revenues—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 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 other countries, Naglazyme is generally sold to our authorized 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 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 products will be closely tied to end-user demand. In the future we expect to receive a net royalty of approximately 4% on net sales of Kuvan in the E.U., which will be recorded as a component of Kuvan net product revenues.

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 have not experienced significant adjustments historically and our estimates have been generally accurate to date.

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’ return rights which are limited to defective product or product that does not meet applicable regulatory specification at the time of delivery and our historical experience of returns for Naglazyme, which is a similar product to Kuvan. Based on these factors, management has concluded that Naglazyme and Kuvan 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.

Our historical experience with rebates and returns specific to Naglazyme, which was approved for commercial sale in the U.S. during the second quarter of 2005, 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 and Kuvan. 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.

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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, 2008, we had not experienced any bad debts and our allowance for doubtful accounts was insignificant. 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.

Aldurazyme product revenues—We began recognizing revenue related to Aldurazyme in the first quarter of 2008 effective with the restructuring of our joint venture with Genzyme (see Note 5 to the accompanying consolidated financial statements for further information). According to the terms of the joint venture restructuring, we receive a 39.5% to 50% royalty on worldwide net Aldurazyme sales by Genzyme depending on sales volume, which is included in net product revenues in the consolidated statements of operations. We recognize a portion of this amount as product transfer revenue when product is released to Genzyme as all of our obligations have been fulfilled at this point and title to, and risk of loss for, the product has transferred to Genzyme. Genzyme’s return rights for Aldurazyme are limited to defective product. The product transfer revenue represents the fixed amount per unit of Aldurazyme that Genzyme is required to pay us if the product is unsold by Genzyme. The amount of product transfer revenue will eventually be deducted from the calculated royalty amount earned when the product is sold by Genzyme. We record the Aldurazyme royalty revenue based on net sales information provided by Genzyme and recognize product transfer revenue based on the fulfillment of Genzyme purchase orders in accordance with SAB 104 and the terms of the related agreements with Genzyme. In periods where BioMarin shipments of Aldurazyme to Genzyme exceed quantities sold to third parties by Genzyme, we will report incremental product transfer revenue. In periods where Genzyme sales to third parties exceed quantities released by BioMarin to Genzyme, we will report net product revenue representing the royalty from Genzyme related to current period sales by Genzyme less the previously recognized product transfer revenue related to the net decrease in Aldurazyme quantities at Genzyme.

We rely on Genzyme’s revenue recognition policies and procedures with respect to net product revenue reporting and our recording of Aldurazyme royalty revenue. Our experience with the commercial aspects of Aldurazyme through BioMarin/Genzyme LLC and our relationship with Genzyme provide a reasonable basis to place such reliance on Genzyme and to make our own internal judgments and estimates regarding Aldurazyme revenue recognition. Genzyme’s historical judgments and estimates have been accurate and have not changed significantly over time.

We understand that Genzyme recognizes revenue from Aldurazyme 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. The timing of product shipment and receipts can have a significant impact on the amount of Aldurazyme royalty revenue that we recognize 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 royalty revenue in a particular period can be impacted by increases or decreases in distributor inventories. If distributor inventories increased to excessive levels, we could experience reduced royalty revenue in subsequent periods. To determine the amount of Aldurazyme inventory in the U.S.

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distribution channel, we understand that Genzyme receives data on sales and inventory levels directly from its primary distributors for the product.

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 2008 includes amortization of $5.2 million related to the $25.0 million up-front license fee received from Merck Serono recognized as revenue during the year and the $30.0 million milestone payment related to the EMEA approval of Kuvan. In December 2008, we fulfilled all performance obligations related to the $25.0 million up-front license fee received from Merck Serono, which was consistent with the previously estimated time period. License revenue for 2007 includes amortization of $6.9 million related to 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 previously deferred the up-front license fee received from Merck Serono and recognized it as revenue on a straight-line basis over approximately 3.4 years, which represented our 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 ended. 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.

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. Due to the significant role we play in the operations of Aldurazyme, primarily the manufacturing and regulatory activities, as well as the rights and responsibilities to deliver the product to Genzyme, we elected not to classify the Aldurazyme royalty as other royalty revenues.

The timing of customer purchases and the resulting product shipments by our sublicensees 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.

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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 was recorded as revenue during 2006. 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, we 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 our lack of experience with the third party.

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 cost 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 inventory write-offs may be required in the future.

Regulatory approval in the U.S. for Naglazyme was received in May 2005 and regulatory approval in the U.S. for Kuvan was received in December 2007, and costs related to the manufacturing of those products prior to these dates 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 net realizable value for the respective products.

Stock-based compensation of $1.7 million was capitalized into inventory for the year ended December 31, 2007. Stock-based compensation of $4.6 million was capitalized into inventory in the year end December 31, 2008.

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 we 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 in a major market 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.

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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 are estimated based on historical experience.

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

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 and tax credits of approximately $232 million at December 31, 2008. 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 prior to 2008. Although we have utilized portion of our net operating losses and tax credits to offset a portion of 2008 taxable income, we currently believe it is more-likely-than-not that we will not be able to realize our deferred tax assets beyond 2008. We developed this estimate by more-likely-than not scenarios for our long-term goals and financial projections. These projections included our estimates of future revenues and expenses based upon historical and estimated future results, and also considered the significant business uncertainties that are implicit in such projections. However, this assumption may change in the future as the uncertainty around the use of the deferred tax assets becomes more certain.

Recent Accounting Pronouncements

See Note 2(s) 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.

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Results of Operations

BioMarin Results of Operations

Net Income (Loss)

Our net income for the year ended December 31, 2008 increased by $46.6 million to $30.8 million, from a net loss of $15.8 million for the year ended December 31, 2007. The increase in net income in 2008 is primarily a result of the following (in millions):

Net loss for the year ended December 31, 2007	$	(15.8	)
Increased Naglazyme gross profit		38.9
Increased Aldurazyme gross profit		52.2
Increased Kuvan gross profit		40.0
Increased Kuvan royalty and license revenues		15.3
Increased research and development expenses		(14.7	)
Increased selling, general and administrative expense		(29.0	)
Increased losses from BioMarin/Genzyme LLC		(32.8	)
Decreased interest income		(9.5	)
Impairment charge on Summit investment		(4.1	)
Absence of Orapred milestone revenue		(4.0	)
Increased interest expense		(2.2	)
Increased income tax expense		(1.9	)
Other individually insignificant fluctuations		(1.6	)
Net income for the year ended December 31, 2008	$	30.8

The increase in Naglazyme gross profit during 2008 as compared to 2007 is primarily a result of additional patients initiating therapy outside the U.S. and the E.U. as well as the favorable impact of foreign currency exchange rates on Naglazyme sales from customers outside the U.S. The increase in Aldurazyme gross profit is attributed to the restructuring of our joint venture with Genzyme effective January 1, 2008. Prior to the restructuring we 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. The increase in Kuvan gross profit in 2008 compared to 2007 is attributed to the FDA approval of Kuvan, in December 2007 which resulted in approximately two weeks of Kuvan sales in 2007 compared to twelve months in 2008. The increase in Kuvan royalty and license revenues is primarily attributed to the $30.0 million milestone received in 2008 from Merck Serono for the EMEA approval of Kuvan offset by the absence of the $15.0 million milestone received in 2007 for the acceptance of the Kuvan EMEA filing. The increase in selling, general and administrative expense was primarily due to the continued international expansion of Naglazyme and commercialization of Kuvan in the U.S. The increase in research and development expense was primarily due to increases in development expense for GALNS, a licensed product for the treatment of Ducherne muscular dystrophy, and other early stage programs. See below for additional information related to the primary net income (loss) fluctuations presented above, including details of our operating expense fluctuations.

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 year ended December 31, 2006	$	(28.5	)
Increased Naglazyme gross profit		28.5
Milestone revenue related to the Kuvan EMEA filing		15.0
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
Decreased other collaborative agreement revenues		(5.5	)
Absence of debt conversion expense		3.3
Increase in corporate overhead and other		(2.0	)
Net loss for the year 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 development costs for Kuvan. 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.

Net Product Revenues and Gross Profit

The following table shows a comparison of net product revenues for the years ended December 31, 2006, 2007 and 2008 (in millions):

	Years Ended December 31,
	2006		2007		2008		2006 vs. 2007			2007 vs. 2008
Naglazyme	$	46.5	$	86.2	$	132.7	$	39.7		$	46.5
Kuvan		—		0.4		46.7		0.4			46.3
Aldurazyme		—		—		72.5		—			72.5
Orapred		3.1		0.2		—		(2.9	)		(0.2	)
Total net product revenues	$	49.6	$	86.8	$	251.9	$	37.2		$	165.1

2008 as Compared to 2007

Net product revenues for Naglazyme in 2008 totaled $132.7 million, of which $111.2 million was earned from end-user customers based outside the U.S. The positive impact of foreign currency exchange rates on Naglazyme sales from customers based outside the U.S. was approximately $5.7 million in 2008 compared to $4.3 million in 2007. Gross profit from Naglazyme in 2008 was approximately $106.8 million, representing gross margins of approximately 81% as compared to $67.9 million in 2007, representing gross margins of approximately 79%. The increase in gross margins is attributed to both foreign currency benefits and improved manufacturing yields.

We received marketing approval for Kuvan in the U.S. in December 2007 and began shipping product that same month. Net product sales for Kuvan in the U.S. for 2008 were $46.7 million. Gross profit from Kuvan in 2008 was approximately $40.4 million, representing gross margins of approximately 86%, which reflect royalties paid to third parties of 11%. In accordance with our inventory accounting policy, we began capitalizing Kuvan inventory production costs after U.S. regulatory approval was obtained in December 2007. As a result, the product sold in 2008 had an insignificant cost basis. We expect that a significant portion of Kuvan sold during 2009 will be previously expensed product and will have a minimal cost basis. The cost of sales for Kuvan for 2008 is principally comprised of royalties paid to third parties based on Kuvan net sales.

Prior to the restructuring of BioMarin/Genzyme LLC effective January 2008, we did not record Aldurazyme revenue and instead recorded our share of the net profits from the joint venture. As a result of the restructuring of the joint venture, we record a 39.5% to 50% royalty on worldwide net product sales of Aldurazyme. We also recognize product transfer revenue when product is released to Genzyme and all of our obligations have been fulfilled. Genzyme’s return rights for Aldurazyme are limited to defective product or product. The product transfer revenue represents the fixed amount per unit of Aldurazyme that Genzyme is required to pay us if the product is unsold by Genzyme. The amount of product transfer revenue will eventually be deducted from the calculated royalty rate when the product is sold by Genzyme. Aldurazyme net product revenues of $72.5 million for 2008 represent $60.1 million of royalty revenue on net Aldurazyme sales by Genzyme. Royalty revenue from

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Genzyme is based on 39.5% to 42% of net Aldurazyme sales by Genzyme, which totaled $151.3 million for 2008. Incremental Aldurazyme net product transfer revenue of $12.4 million for 2008 reflects incremental shipments of Aldurazyme to Genzyme to meet future product demand. In January 2008, we transferred existing finished goods on-hand to Genzyme under the restructured terms of the BioMarin/Genzyme LLC agreements, resulting in the recognition of significant incremental product transfer revenue during 2008. In the future, to the extent that Genzyme Aldurazyme inventory quantities on hand remain flat, we expect that our total Aldurazyme revenues will approximate the 39.5% to 50% royalties on net product sales by Genzyme. In 2008, Aldurazyme gross profit was $52.2 million, representing a gross margin of 72%, which reflects the profit earned on royalty revenue and net incremental product transfer revenue. Our Aldurazyme gross margins may fluctuate depending on the mix of royalty revenue, from which we earn higher gross profit, and product transfer revenue, from which we earn a lower gross profit.

Total cost of sales during 2008, was $52.5 million, a significant increase compared to $18.4 million in 2007. The increase is primarily due to the increased net product revenues discussed above, as well as the restructuring of the joint venture with Genzyme, prior to which we did not recognize Aldurazyme net product revenues and the related cost of sales that were recognized by the joint venture.

2007 as Compared to 2006

Net product revenues for Naglazyme in 2007 totaled $86.2 million, of which $68.7 million was earned from end user customers based outside the U.S. The positive impact of foreign currency exchange rates on Naglazyme sales from customers based outside the U.S. was approximately $4.3 million in 2007 compared to $2.5 million in 2006. 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%. The increase in gross margins is attributed to both foreign currency benefits and improved manufacturing yields.

We received marketing approval for Naglazyme in the U.S. in May 2005 and began shipping product in June 2005. In accordance with our inventory accounting policy, we began capitalizing Naglazyme inventory production costs after U.S. regulatory approval was obtained in May 2005. As a result, some of the product sold in 2006 and 2007 had an insignificant cost basis and therefore lower cost of goods sold was reported. Substantially all of the Naglazyme inventory with an insignificant cost basis was 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. 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 subsequent to March 2006, we did not record 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. Our performance obligations related to the initial $25.0 million up-front payment were completed as of December 2008. Therefore, future periods will not include amortization amounts related to this payment. As shared development spending increases or decreases, contract research revenues will also change proportionately. Reimbursable revenues are expected to increase if PEG-PAL, or 6R-BH4 successfully complete Phase 2 clinical trials and Merck Serono exercises its option to co-develop the program. The related costs are included in research and development expenses.

Collaborative agreement revenues in 2006, 2007, and 2008 were $18.7 million, $28.3 million and $38.9 million, respectively. Collaborative agreement revenues are comprised of amortization of the 2005 $25.0 million

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upfront license fee received from Merck Serono, reimbursable Kuvan development costs and Kuvan milestones earned from Merck Serono in 2007 and 2008. Amortization of the upfront license fee amounted to $7.4 million, $6.9 million, and $5.2 million, in 2006, 2007 and 2008, respectively. Reimbursable Kuvan development costs incurred during 2006, 2007 and 2008, were $11.3 million, $6.4 million and $3.7 million, respectively. The milestones included in 2007 and 2008 collaborative agreement revenues are the 2007, $15.0 million milestone payment received from Merck Serono upon EMEA acceptance of the Kuvan filing and $30.0 million milestone payment received from Merck Serono upon EMEA approval of Kuvan in 2008, respectively. Kuvan development costs primarily decreased during 2008 as compared to 2007 due to reductions in Kuvan clinical trial activities subsequent to the FDA approval received in December 2007. Amortization of the up-front license fee received from Merck Serono and recognized as revenue decreased from 2007 to 2008 due primarily to the changes in the amortization period.

Royalty and License Revenues

Royalty and license revenue in 2008 totaled $5.7 million compared to $6.5 million in 2007. Royalty and license revenues in 2008 included royalty revenues from Orapred product sold by the sublicensee of $3.8 million, Kuvan royalty revenues for products sold in Japan of $0.4 million and a $1.5 million milestone payment related to the Japanese approval of Kuvan in July 2008. Royalty and license revenues in 2007 included royalty revenues from Orapred product sold by the sublicensee of $2.3 million and 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.

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 $14.7 million to $93.3 million for the year ended December 31, 2008, from $78.6 million for the year ended December 31, 2007. The change in research and development expenses for the year ended December 31, 2008 is primarily as a result of the following (in millions):

Research and development expenses for the year ended December 31, 2007	$	78.6
Increased GALNS for Morquio disease development expenses		11.2
Decreased PEG-PAL development costs		(2.1	)
Increase in research and development expense on other early stage programs		5.7
Increased Aldurazyme development expenses		1.6
Increased stock-based compensation expense		1.6
License payment related to collaboration with Summit Corporation plc		1.4
Decreased Kuvan clinical trial and manufacturing costs		(9.1	)
Decreased 6R-BH4 development costs for indications other than PKU		(0.6	)
Increase in non-allocated research and development expense and other net changes		5.0
Research and development expenses for the year ended December 31, 2008	$	93.3

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The increase in GALNS development costs is primarily attributed to an increase in pre-clinical studies and manufacturing costs. The increase in Aldurazyme development costs relate to certain development costs that are no longer charged to the joint venture. The decrease in Kuvan clinical trial and manufacturing costs is primarily related to the capitalization of these costs into inventory during 2008 whereas in 2007 these costs were expensed prior to the FDA approval in December 2007. The decrease in PEG-PAL development costs is primarily due to a decline in pre-clinical studies in 2008. 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 and spending on our GALNS program for the treatment of Morquio Syndrome and our PEG-PAL program. The increase in stock-based compensation expense is a result of an increased number of options outstanding due to increased headcount and a higher average stock price on the related grant date. The increase in non-allocated research and development primarily includes increases in facilities costs, general research costs and research and development personnel.

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 increased 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 Kuvan clinical trial and manufacturing expenses		(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	)
Decreased Naglazyme development costs		(1.1	)
Increase in research and development expense on early stage programs		2.0
Increase in 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 incurred as Kuvan approached 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 non-allocated research and development primarily includes increases in facilities costs, general research costs and non-allocated research and development personnel. We expect research and development expense to increase in future periods, primarily as a result of spending on our GALNS program and on our PEG-PAL program.

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; human resources; finance, legal and support personnel expenses; and other external corporate costs such as insurance, audit and legal fees.

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Selling, general and administrative expenses increased by $29.1 million, to $106.6 million for the year ended December 31, 2008, from $77.5 million for the year ended December 31, 2007. The components of the change for the year ended December 31, 2008 primarily include the following (in millions):

Selling, general and administrative expense for the year ended December 31, 2007	$	77.5
Increased Naglazyme sales and marketing expenses		7.6
Increased stock-based compensation expense		4.4
Increased Kuvan commercialization expenses		9.8
Increased foreign exchange losses on un-hedged transactions		2.0
Net increase in corporate overhead and other administrative costs		5.3
Selling, general and administrative expenses for the year ended December 31, 2008	$	106.6

Naglazyme sales and marketing expenses increased in 2008, primarily due to the expansion of our international commercial activities. We also incurred increased commercialization expenses related to the Kuvan commercial launch. The increase in stock-based compensation expense was the result of an increased number of outstanding options and a higher average stock price on the related grant date. The increase in corporate overhead and other administrative costs was primarily related to increases in salaries and benefits due to our growth in administrative employee headcount, consulting fees, travel, facilities and non-income taxes. We expect selling, general and administrative expenses to increase in future periods as a result of the international expansion of Naglazyme and the U.S. commercialization activities for Kuvan.

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 expenses		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 commercial launch of Kuvan in the U.S. 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 significant growth in employee headcount. We expect selling, general and administrative expenses to increase in future periods as a result of the international expansion of Naglazyme and Kuvan.

Amortization of Intangible Assets

Amortization of 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. Kuvan license payments made to third parties as a result of the FDA approval of Kuvan in December 2007 and the EMEA approval of Kuvan in December 2008. The Orapred and Kuvan intangible assets are being amortized over approximately 3.5 years, 7.0 years and 10.0 years, respectively. Amortization of acquired intangible assets for the years ended December 31, 2006, 2007 and 2008 totaled $3.7 million, $4.4 million and $4.4 million, respectively. The increase in amortization of the acquired intangible assets from 2006 to 2007 was due to the change in

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expected useful life of the Orapred intangible assets from 15.0 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 related to Orapred will be transferred to the subliensee. We expect amortization expense associated with the Orapred intangible assets to approximate $2.9 million through the end of the expected useful life in August 2009. Amortization expense related to the Kuvan intangible asset is recorded as a component of cost of sales and is expected to approximate $0.6 million annually through 2014 and $0.3 million annually thereafter through 2018.

Equity in the Income (Loss) of BioMarin/Genzyme LLC

Equity in the income (loss) of BioMarin/Genzyme LLC includes our 50% share of the joint venture’s income/loss for the period. Effective January 2008, we and Genzyme restructured BioMarin/Genzyme LLC regarding the manufacturing, marketing and sale of Aldurazyme. As of January 1, 2008, instead of sharing all costs and profits equally through the 50/50 joint venture, BioMarin/Genzyme LLC’s operations will consist primarily of certain research and development activities and intellectual property will continue to be managed in the joint venture with costs shared equally by BioMarin and Genzyme.

Equity in the income (loss) of the joint venture decreased $32.8 million to a loss of $2.3 million in 2008, compared to equity in the income of the joint venture of $30.5 million in 2007. The fluctuation from 2007 to 2008 is attributed to the restructuring of the joint venture which became effective on January 1, 2008. Equity in the income of the joint venture increased to $30.5 million in 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.

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 decreased to $16.4 million for 2008, from $25.9 million for 2007, primarily due to lower interest rates offset by increased average levels of cash and investments during 2008.

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 Expense

We incur interest expense on our convertible debt. Interest expense also includes imputed interest expense on the discounted acquisition obligation for the Ascent Pediatrics transaction. Interest expense was $16.4 million in 2008, as compared to $14.2 million in 2007, representing an increase of $2.2 million. The increase in interest expense is attributed to the payment of a full year of interest expense related to our $324.9 million of 1.875% senior subordinate convertible notes due in 2017 that were issued in April 2007.

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

The decrease in imputed interest expense was due to a lower outstanding balance of the acquisition obligation in 2007. Imputed interest expense totaled $4.7 million, $4.5 million and $4.4 million for the years ended December 31, 2006, 2007 and 2008, respectively. Imputed interest on the outstanding balance will be incurred through August 2009 when payment is due on the Medicis obligation.

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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 interest 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 was converted into approximately 3.7 million shares of common stock.

Changes in Financial Position

From December 31, 2007 to December 31, 2008, our inventory increased by approximately $40.8 million. The increase in inventory was primarily attributed to the distribution of Aldurazyme inventory from the joint venture and the capitalization of Kuvan inventory costs as a result of the FDA approval in December 2007. Our accounts receivable increased by $37.3 million due to increased sales of Naglazyme and Kuvan and receivables from Genzyme for Aldurazyme product transfer and royalty revenues. In the first quarter of 2008, we received distributions of $16.7 million of cash and $26.8 million of inventory from BioMarin/Genzyme LLC as a result of the restructuring of the joint venture. Other current assets increased approximately $43.1 million from December 31, 2007 to December 31, 2008, primarily as a result of the $30.0 million milestone earned from Merck Serono due to the EMEA approval of Kuvan and the reclassification of $6.2 million of restricted cash from long-term to short-term. Our net property, plant and equipment increased by approximately $48.2 million from December 31, 2007 to December 31, 2008, primarily as a result of the purchase of our facility at 300 Bel Marin Keys, in Novato, California, capital equipment and improvements to our other facilities practically offset by depreciation expense during the period. We expect property, plant and equipment to increase in future periods, due to several ongoing facility improvement projects. Our total current liabilities increased by approximately $68.5 million primarily due to the reclassification of amounts due to Medicis from non-current to current.

Liquidity and Capital Resources

Cash and Cash Flow

As of December 31, 2008, our combined cash, cash equivalents and short-term investments totaled $559.8 million, a decrease of $25.8 million from $585.6 million at December 31, 2007.

The decrease in our combined balance of cash, cash equivalents and short-term investments during 2008 was $25.8 million, which was $6.2 million more than the net decrease in the combined balance in 2007 of $19.6 million, excluding offering proceeds of $316.4 million. The primary items contributing to the increase in net cash outflow, excluding the net offering proceeds, in 2008 were as follows (in millions):

Increased proceeds from stock option exercises and ESPP	$	13.2
Increased capital asset purchases		(34.0	)
Cash received from the settlement of foreign currency forward contracts		5.0
Investment in Summit Corporation plc		(5.7	)
Net decreased cash used in operating activities, including net payments for working capital, and other		15.3
Total increase in net cash outflow excluding net offering proceeds	$	(6.2	)

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. Increased capital purchases include the purchase of our facility at 300 Bel Marin Keys Drive, Novato, California. Net payments for working capital in 2008 primarily include increased inventory build of $6.6 million, which excluded the inventory distribution from the joint venture, increased accounts receivable build of $35.0 million, the Merck Serono receivable of $30.0 million related to the EMEA approval of Kuvan, and decreased accounts payable and accrued liabilities build of $3.4 million.

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With respect to the restructuring of our joint venture with Genzyme, our liquidity was not materially impacted by the restructuring despite the change in the Aldurazyme transaction structure. We remain responsible for the cash outflows for the investment in inventory and continue to receive the cash inflows from sales of Aldurazyme on a quarterly basis, except we currently receive cash through the royalty from Genzyme instead of cash distributions from the joint venture prior to the restructuring. However, as we now record accounts receivable from Genzyme that include both amounts related to royalty revenue and incremental product transfer revenue, our days sales outstanding has increased as a result of the joint venture restructuring and we expect our days sales outstanding to either remain consistent with the current level or increase modestly in the future. Genzyme is required to pay the royalty due within 45 days of the quarter in which the relevant sales were made, and with respect to the incremental product transfer revenue for unsold Aldurazyme, Genzyme is required to pay within 45 days after the calendar quarter in which the unit was determined to be unsold, which is not determinable until the product is lost, destroyed or expires before a sale to a customer. Further, pursuant to the terms of the restructured joint venture, we received a cash distribution of $16.7 million and an inventory distribution of $26.8 million from the joint venture in the first quarter of 2008.

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, $167.0 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 $19.6 million, which was $50.8 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 license proceeds related to sublicense of North American Orapred rights	$	(10.0	)
Absence of net repayments of equipment and facility loans		20.9
Receipt of milestone payment for acceptance of Kuvan MAA filing by the EMEA		15.0
Decreased capital asset purchases		2.2
Absence of conversion premium and accrued interest payment		4.1
Absence of milestone payment for the approval and launch of Orapred ODT		3.2
Decreased cash flows from BioMarin/Genzyme LLC		(2.7	)
Increased proceeds from stock option exercises		2.1
Net decreased cash used in operating activities, including net payments for working capital, and other		16.0
Total decrease in net cash outflow excluding net offering proceeds	$	50.8

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.

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We expect that our net cash outflow in 2009 related to capital asset purchases will increase significantly compared to 2008. The expected increase in capital asset purchases primarily includes: 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.

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 2009, 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.

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, 2006, 2007, and 2008 and for the period since inception (March 1997 for the portion not allocated to any major program) represent the following (in millions):

	2006		2007		2008		Since Program Inception
GALNS for Morquio disease	$	1.6	$	2.2	$	12.6	$	16.4
6R-BH4 for other indications, including endothelial dysfunction		8.9		15.0		14.7		42.1
PEG-PAL		4.5		13.2		11.0		31.2
Not allocated to specific major current projects		12.3		21.0		28.4		181.2
	$	27.3	$	51.4	$	66.7	$	270.9

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 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;” “—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

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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.

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 our 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 $497.1 million of convertible debt will impact our liquidity due to the semi-annual cash interest payments and the scheduled repayments of the debt.

As a result of the Ascent Pediatrics transaction, we expect to pay Medicis $73.6 million in 2009, of which $8.6 million at our election is payable 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, 2008 is presented below (in thousands).

	Payments Due by Period
	2009		2010		2011-2012		2013-2014		2015 and Thereafter		Total
Medicis obligations	$	73,600	$	—	$	—	$	—	$	—	$	73,600
Convertible debt and related interest		10,401		10,401		20,801		186,544		340,104		568,251
Operating leases		3,894		4,026		6,481		2,624		—		17,025
Research and development and purchase commitments		35,689		612		3,927		2,827		3,353		46,408
Total	$	123,584	$	15,039	$	31,209	$	191,995	$	343,457	$	705,284

We are also subject to contingent payments related to various development activities totaling approximately $111.7 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 our joint venture partner 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, $1.4 million and $1.8 million related to Aldurazyme during 2006, 2007, and 2008, 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, 2008, our investment portfolio did not include any investments with significant exposure to the subprime mortgage market issues. Based on our investment portfolio and interest rates at December 31, 2008, 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 $5.7 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, 2008 (in thousands):

	Carrying Value
Cash and cash equivalents	$	222,900	*
Short-term investments		336,892	**
Total	$	559,792

* 94% of cash and cash equivalents invested in money market instruments and 6% of uninvested cash.

** 66% of short-term investments invested in U.S. government treasuries, 17% in corporate securities, 10% in commercial paper, and 7% in U.S. government backed 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, 2008.

Foreign Currency Exchange Rate Market Risk

We transact business in various foreign currencies, primarily in certain European countries. Accordingly, we are subject to exposure from movements in foreign currency exchange rates, primarily related to Euro and British Pound revenue from sales of our products in Europe. Our operating expenses in the United Kingdom and other European counties are in British Pounds and Euros, respectively. Both serve to mitigate a portion of the exposure related to the above-mentioned revenue in both markets.

We hedge a portion of our net position in assets and liabilities denominated in Euros and British Pounds using primarily forward contracts. We also hedge a percentage of our forecasted international revenue with forward contracts. Our hedging policy is designed to reduce the impact of foreign currency exchange rate movements.

In the second quarter of 2008, we commenced hedging a portion of our forecasted Euro-based revenue to help mitigate short-term exposure to fluctuations of the currency by entering into foreign exchange forward rate contracts. These contracts have maturities of less than 12 months.

Our hedging programs are expected to reduce, but do not entirely eliminate, the short-term impact of currency exchange rate movements in operating expenses. As of December 31, 2008, we had foreign currency forward contracts to sell approximately $61.6 million in Euros and $3.9 million in British Pounds. As of December 31, 2008, our outstanding foreign currency forward contracts had a fair value of $1.9 million, of which is $0.8 million included in other current assets, and $1.1 million is included in accrued expenses.

We do not use derivative financial instruments for speculative trading purposes, nor do we hedge foreign currency exposure in a manner that entirely offsets the effects of changes in foreign exchange rates. The counterparty to these forward contracts is a creditworthy multinational commercial bank, which minimizes the risk of counterparty nonperformance. We currently do not use financial instruments to hedge local currency operating expenses in Europe. Instead, we believe that a natural hedge exists, in that local currency revenue substantially offsets the local currency operating expenses. We regularly review our hedging program and may, as part of this review, make changes to the program.

Based on our overall currency rate exposures at December 31, 2008, we expect that a near-term 10% fluctuation of the U.S. dollar could result in the potential change in the fair value of our foreign currency sensitive assets and investments by approximately $0.9 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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At December 31, 2008, we had cash of approximately $9.5 million denominated in foreign country currencies, which represented approximately 1.7% of the total investment portfolio. As a result, our investment portfolio is subject to limited amounts of foreign exchange risk.

A significant portion of Aldurazyme sales by Genzyme are earned outside of the U.S. and therefore our royalty on Aldurazyme sales is subject to risk of foreign currency exchange rate fluctuations, primarily the Euro and British pound. The policies and procedures related to the management of foreign currency risk of Aldurazyme sales are established and maintained by our joint venture partner, Genzyme.

Item 8. Financial Statements and Supplementary Data

The information required to be filed in this item appears on pages F-1 to F-38 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 (the Exchange Act)) as of the end of the period covered by this report. Based on the evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls are effective to ensure that the information required to be disclosed by us in the reports we file or submit under the Exchange Act 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, 2008. 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, 2008 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 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 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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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 our 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 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

Amendment to Bylaws

On February 25, 2009, our board of directors approved and adopted Amended and Restated Bylaws, or the Amended Bylaws. The Amended Bylaws were effective as of February 25, 2009. In addition to various clarifying and conforming amendments, the Amended Bylaws revise and update the procedures for stockholders to propose business or nominations for election of directors to be considered at annual or special meetings of the stockholders. Among other things, the amendments clarify that the public announcement of an adjournment or postponement of an annual or special meeting will not commence a new time period (or extend any time period) for the giving of a stockholder’s notice of proposed business or nomination for election of directors.

The amendments also expand the information that must be included in a stockholder’s notice to include, among other things, (i) a description of any agreement, arrangement or understanding between the stockholder and the beneficial owner, if any, on whose behalf the proposal or nomination is made that has been entered into as of the date of the notice relating to the proposed business or nomination; (ii) in the case of proposed business, a description of the reasons for conducting such business at the meeting and any material interest in such business of the stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (iii) a description of any agreement, arrangement or understanding that has been entered into by the stockholder or beneficial owner with the effect or intent to mitigate loss, manage risk or benefit from share price changes or increase or decrease the stockholder’s or beneficial owner’s voting power with respect to the Company’s stock.

The foregoing description of the Amended Bylaws is qualified in its entirety by reference to the full text of the Amended Bylaws, which is attached hereto as Exhibit 3.3 and is incorporated herein by reference.

Amendment to Rights Plan

On September 11, 2002, our Board of Directors authorized a dividend of one preferred share purchase right, or a Right, for each share of our common stock outstanding at the close of business on September 23, 2002. In connection with the authorization of the Rights, the Company entered into a Rights Agreement, dated as of September 11, 2002, or the Original Rights Agreement, with Mellon Investor Services LLC, a New Jersey limited liability company, as Rights Agent, or the Rights Agent. In connection with an increase in the number of

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authorized shares of our common stock in June 2003, the Company and the Rights Agent amended and restated the Original Rights Agreement pursuant to an Amended and Restated Rights Agreement, dated as of August 7, 2003, or the Prior Rights Plan. On February 27, 2009, the Company and the Rights Agent entered into an Amended and Restated Rights Agreement, or the Amended Rights Plan, which amends and restates the Prior Rights Plan. The term of the Rights Agreement and the share ownership threshold discussed below have not been changed since the Rights Plan was originally adopted in 2002.

Among other things, the Amended Rights Plan provides that, at any time after a person or group of affiliated or associated persons acquires, or obtains the right to acquire, beneficial ownership of 15% or more of our common shares (such person or group being referred to herein as an Acquiring Person), we may exchange the Rights at an exchange ratio of one share of our common stock per Right (such an event being referred to herein as an Exchange).

Furthermore, the Amended Rights Plan provides that, in effecting an Exchange, we may enter into a trust agreement by which we transfer to the trust created by such trust agreement, or the Trust, all shares of our common stock issued pursuant to the Exchange. The Trust would hold the shares of our common stock for the benefit of stockholders entitled to receive them pursuant to the Exchange. Stockholders would receive shares from the Trust after complying with the relevant terms of the trust agreement.

The Amended Rights Plan also provides that, in the event a person, entity or group becomes an Acquiring Person (such an event being referred to herein as a Trigger Event), each holder of a Right will have a sixty day period (subject to adjustment in certain circumstances) thereafter to exercise his, her or its Rights.

Under the Amended Rights Plan, following a Trigger Event and the expiration of the exercise period described above, we may, at our option, redeem all of the outstanding Rights in connection with certain transactions not involving an Acquiring Person in which all holders of our common stock are treated alike. In addition, in certain circumstances, we may redeem all of the outstanding Rights following a Trigger Event and the expiration of the exercise period if the Acquiring Person’s beneficial ownership has dropped below the 15% threshold.

The foregoing description of the Amended Rights Plan is qualified in its entirety by reference to the full text of the Amended Rights Plan, which is attached hereto as Exhibit 4.1 and is incorporated herein by reference.

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Part III

Item 10. Directors and Executive Officers and Corporate Governance

We incorporate information regarding our directors, executive officers and corporate governance into this section by reference from sections captioned “Election of Directors” and “Executive Officers” in the proxy statement for our 2009 annual meeting of stockholders.

Item 11. Executive Compensation

We incorporate information regarding executive compensation into this section by reference from the section captioned “Executive Compensation” in the proxy statement for our 2009 annual meeting of stockholders.

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

We incorporate information regarding security ownership of our beneficial owners, management and related stockholder matters into this section by reference from the section captioned “Security Ownership of Certain Beneficial Owners” in the proxy statement for our 2009 annual meeting of stockholders.

Item 13. Certain Relationships and Related Transactions and Director Independence

We incorporate information regarding certain relationships related to transactions and director independence into this section by reference from the section captioned “Interest of Insiders in Material Transactions” in the proxy statement for our 2009 annual meeting of stockholders.

Item 14. Principal Accounting 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 2009 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

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Exhibit Index

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.
4.1	*	Amended and Restated Rights Agreement, dated as of February 27, 2009, between BioMarin Pharmaceutical Inc. and Mellon Investor Services LLC, as Rights Agent.
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.

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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†	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.
10.4†	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.
10.5†	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.
10.6†	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.
10.7†	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.
10.8†	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.
10.9†	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.
10.10†	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.
10.11†	Amended and Restated BioMarin Pharmaceutical Inc. Nonqualified Deferred Compensation Plan, as adopted on December 1, 2005 and as amended and restated on January 1, 2009, previously filed with the Commission on December 23, 2008 as Exhibit 10.8 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
10.12†	Amended and Restated Employment Agreement with Jean-Jacques Bienaime dated January 1, 2009 previously filed with the Commission on December 23, 2008, as Exhibit 10.1 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.

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10.13†	Amended and Restated Employment Agreement with Stephen Aselage dated January 1, 2009 previously filed with the Commission on December 23, 2008 as Exhibit 10.2 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
10.14†	Amended and Restated Employment Agreement with Robert A. Baffi dated January 1, 2009 previously filed with the Commission on December 23, 2008, as Exhibit 10.3 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
10.15†	Amended and Restated Employment Agreement with Emil D. Kakkis, M.D., Ph.D. dated January 1, 2009 previously filed with the Commission on December 23, 2008 as Exhibit 10.4 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
10.16†	Amended and Restated Employment Agreement with Jeffrey H. Cooper dated January 1, 2009 previously filed with the Commission on December 23, 2008 as Exhibit 10.5 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
10.17†	Amended and Restated Employment Agreement with G. Eric Davis dated January 1, 2009, previously filed with the Commission on December 23, 2005 as Exhibit 10.6 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
10.18†	Amended and Restated Employment Agreement with Mark Wood dated January 1, 2009 previously filed with the Commission on December 23, 2008 as Exhibit 10.7 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.
10.19†	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.
10.20	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.
10.21	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.
10.22	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.
10.23	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.
10.24†	2009 Technical Amendments to BioMarin Pharmaceutical Inc. 2006 Share Incentive Plan, effective January 1, 2009, previously filed with the Commission on December 23, 2008, as Exhibit 10.9 to the Company’s Current Report on Form 8-K, which is incorporated herein by reference.

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10.25	Amended and Restated 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.
10.26	Manufacturing, Marketing and Sales Agreement dated as of January 1, 2008, by and among BioMarin Pharmaceutical Inc., Genzyme Corporation and BioMarin/Genzyme LLC previously filed with the Commission on February 27, 2008 as Exhibit 10.30 to the Company’s 2007 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.
10.27	Amended and Restated Collaboration Agreement dated as of January 1, 2008, by and among BioMarin Pharmaceutical Inc., Genzyme Corporation and BioMarin/Genzyme LLC previously filed with the Commission on February 27, 2007 as Exhibit 10.31 to the Company’s 2007 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.
10.28	Members Agreement dated as of January 1, 2008 by and among BioMarin Pharmaceutical Inc., Genzyme Corporation, BioMarin Genetics Inc., and BioMarin/Genzyme LLC previously filed with the Commission on February 27, 2007 as Exhibit 10.32 to the Company’s 2007 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.
10.29*	Development and Commercialization Agreement dated as of January 4, 2009 by and between BioMarin CF Limited and La Jolla Pharmaceutical Company. Portions of this document have been redacted pursuant to a request for confidential treatment filed pursuant to the Freedom of Information Act.
10.30*	Securities Purchase Agreement dated as of January 4, 2009 by and between BioMarin Pharmaceutical Inc. and La Jolla Pharmaceutical Company. Portions of this document have been redacted pursuant to a request for confidential treatment filed pursuant to the Freedom of Information Act.
10.31*	Amendment No. 1 to the Development and Commercialization Agreement dated as of January 16, 2009 by and between BioMarin CF Limited and La Jolla Pharmaceutical Company.
10.32*	Amendment No. 1 to the Securities Purchase Agreement dated as of January 16, 2009 by and between BioMarin Pharmaceutical Inc. and La Jolla Pharmaceutical Company.
10.33*†	Summary of Bonus Plan
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.

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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, 2008 and 2007, and for the years ended December 31, 2008, 2007 and 2006.

* Filed herewith

† Management contract or compensatory plan or arrangement

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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, 2009	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, 2009
/s/    JEFFREY H. COOPER         Jeffrey H. Cooper	Senior Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	February 27, 2009
/s/    PIERRE LAPALME         Pierre LaPalme	Chairman and Director	February 27, 2009
/s/    ELAINE HERON         Elaine Heron	Director	February 27, 2009
/s/    JOSEPH KLEIN, III         Joseph Klein, III	Director	February 27, 2009
/s/    ALAN J. LEWIS         Alan J. Lewis	Director	February 27, 2009
/s/    MICHAEL G. GREY         Michael G. Grey	Director	February 27, 2009
/s/    RICHARD A. MEIER         Richard A. Meier	Director	February 27, 2009
/s/    V. BRYAN LAWLIS         V. Bryan Lawlis	Director	February 27, 2009

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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

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, 2008 and 2007, and the related consolidated statements of operations, stockholders’ equity (deficit) and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2008. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the financial statements of BioMarin/Genzyme LLC (a 50 percent owned joint venture) for the years 2007 and 2006. The Company’s investment in BioMarin/Genzyme LLC (in thousands) at December 31, 2007 was $44,881, and its equity in income of BioMarin/Genzyme (in thousands) was $30,525 and $19,274 for the years ended December 31, 2007 and 2006, 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, 2008 and 2007, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

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, 2008, 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 24, 2009 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting

(signed) KPMG LLP

San Francisco, California

February 24, 2009

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, 2008, 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 in Item 9A. 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, 2008, 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. and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders’ equity (deficit) and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2008, and our report dated February 24, 2009 expressed an unqualified opinion on those consolidated financial statements. Our report refers to the report of other auditors.

(signed) KPMG LLP

San Francisco, California

February 24, 2009

F-2

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2007 and 2008

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

	December 31, 2007			December 31, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	228,343		$	222,900
Short-term investments		357,251			336,892
Accounts receivable, net		16,976			54,298
Advances to BioMarin/Genzyme LLC		2,087			174
Inventory		32,445			73,162
Other current assets		7,195			50,270
Total current assets		644,297			737,696
Investment in BioMarin/Genzyme LLC		44,881			915
Other investments		—			1,633
Property, plant and equipment, net		76,818			124,979
Intangible assets, net		9,596			7,626
Goodwill		21,262			21,262
Other assets		18,425			12,584
Total assets	$	815,279		$	906,695
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	49,907		$	58,851
Current portion of acquisition obligation, net of discount		6,309			70,741
Deferred revenue		5,327			307
Other current liabilities		—			182
Total current liabilities		61,543			130,081
Convertible debt		497,375			497,083
Long-term portion of acquisition obligation, net of discount		66,553			—
Other long-term liabilities		2,082			2,856
Total liabilities		627,553			630,020
Stockholders’ equity:
Common stock, $0.001 par value: 250,000,000 shares authorized at December 31, 2007 and December 31, 2008; 97,114,159 and 99,868,145 shares issued and outstanding at December 31, 2007 and 2008, respectively		97			100
Additional paid-in capital		794,917			852,947
Company common stock held by deferred compensation plan		—			(882	)
Accumulated other comprehensive income		139			1,106
Accumulated deficit		(607,427	)		(576,596	)
Total stockholders’ equity		187,726			276,675
Total liabilities and stockholders’ equity	$	815,279		$	906,695

See accompanying notes to consolidated financial statements.

F-3

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2006, 2007 and 2008

(In thousands, except for per share data)

	December 31,
	2006			2007			2008
Revenues:
Net product revenues	$	49,606		$	86,802		$	251,851
Collaborative agreement revenues		18,740			28,264			38,907
Royalty and license revenues		15,863			6,515			5,735
Total revenues		84,209			121,581			296,493
Operating expenses:
Cost of sales		8,740			18,359			52,509
Research and development		66,735			78,600			93,291
Selling, general and administrative		48,507			77,539			106,566
Amortization of acquired intangible assets		3,651			4,371			4,371
Total operating expenses		127,633			178,869			256,737
Income (Loss) from operations		(43,424	)		(57,288	)		39,756
Equity in the income (loss) of BioMarin/Genzyme LLC		19,274			30,525			(2,270	)
Interest income		12,417			25,932			16,388
Interest expense		(13,411	)		(14,243	)		(16,394	)
Debt conversion expense		(3,315	)		—			—
Impairment loss on investment		—			—			(4,056	)
Income (Loss) before income taxes		(28,459	)		(15,074	)		33,424
Provision for income taxes		74			729			2,593
Net income (loss)	$	(28,533	)	$	(15,803	)	$	30,831
Net income (loss) per share, basic	$	(0.34	)	$	(0.16	)	$	0.31
Net income (loss) per share, diluted	$	(0.34	)	$	(0.16	)	$	0.29
Weighted average common shares outstanding, basic		84,582			95,878			98,975
Weighted average common shares outstanding, diluted		84,582			95,878			103,572

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, 2006, 2007 and 2008 (in thousands)

	Common stock			Additional Paid-in Capital		Company Common Stock held by Deferred Compensation Plan			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
	Shares	Amount
Balance at January 1, 2006	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 compensation expense related to modification of awards	—		—		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
Net income	—		—		—		—			—			30,831			30,831
Fair market value adjustments of available-for-sale investments	—		—		—		—			1,201			—			1,201
Unrealized loss on foreign currency hedges	—		—		—		—			(212	)		—			(212	)
Foreign currency translation adjustment	—		—		—		—			(22	)		—			(22	)
Comprehensive income																31,798
Issuance of common stock under ESPP	209		—		2,634		—			—			—			2,634
Exercise of common stock options	2,489		3		25,813		—			—			—			25,816
Excess tax benefit from exercises	—		—		960		—			—			—			960
Restricted stock vested during the period	39		—		—		—			—			—			—
Common stock held by nonqualified deferred compensation plan	—		—		—		(882	)		—			—			(882	)
Conversion of convertible notes	17				288		—			—			—			288
Stock-based compensation	—		—		28,335		—			—			—			28,335
Balance at December 31, 2008	99,868	$	100	$	852,947	$	(882	)	$	1,106		$	(576,596	)	$	276,675

See accompanying notes to consolidated financial statements.

F-5

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2006, 2007 and 2008

(In thousands)

	December 31,
	2006			2007			2008
Cash flows from operating activities:
Net income (loss)	$	(28,533	)	$	(15,803	)	$	30,831
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		11,949			13,645			17,631
Amortization of discount on short-term investments		(2,167	)		(12,453	)		(6,487	)
Imputed interest on acquisition obligation		4,685			4,527			4,378
Equity in the income (loss) of BioMarin/Genzyme LLC		(19,274	)		(30,525	)		2,270
Stock-based compensation		10,596			19,415			28,336
Impairment loss on investment		—			—			4,056
Excess tax benefit from stock option exercises		—			—			(960	)
Unrealized foreign exchange gain (loss) on forward contracts		—			165			(228	)
Other		—			9			(15	)
Changes in operating assets and liabilities:
Accounts receivable, net		(8,809	)		(2,306	)		(37,322	)
Advances to BioMarin/Genzyme LLC		(526	)		(491	)		1,913
Inventory		(14,177	)		(7,371	)		(13,938	)
Other current assets		(807	)		(3,158	)		(43,056	)
Other assets		(3,091	)		(4,745	)		43
Accounts payable and accrued liabilities		10,490			10,850			7,433
Other liabilities		(4,795	)		3			960
Deferred revenue		(7,807	)		(6,788	)		(5,020	)
Net cash used in operating activities		(52,266	)		(35,026	)		(9,175	)
Cash flows from investing activities:
Purchase of property and equipment		(24,583	)		(22,413	)		(56,368	)
Maturities and sales of short-term investments		29,906			693,814			761,178
Purchase of short-term investments		(217,724	)		(838,864	)		(733,131	)
Investment in BioMarin/Genzyme LLC		—			—			(1,750	)
Distributions from BioMarin/Genzyme LLC		19,800			17,100			16,683
Investment in Summit Corporation plc		—			—			(5,689	)
Net cash used in investing activities		(192,601	)		(150,363	)		(19,077	)
Cash flows from financing activities:
Proceeds from ESPP and exercise of stock options		13,087			15,220			28,443
Decrease in cash balances related to long-term debt		17,049			—			—
Repayment of equipment and facility loans		(20,909	)		—			—
Excess tax benefit from stock option exercises		—			—			960
Repayment of acquisition obligation		(7,700	)		(7,000	)		(6,500	)
Net proceeds from public offering of common stock		127,431			—			—
Net proceeds from convertible debt offering		166,979			316,350			—
Repayment of capital lease obligations		—			—			(94	)
Net cash provided by financing activities		295,937			324,570			22,809
Net increase (decrease) in cash and cash equivalents		51,070			139,181			(5,443	)
Cash and cash equivalents:
Beginning of year		38,092			89,162			228,343
End of year	$	89,162		$	228,343		$	222,900
Supplemental cash flow disclosures:
Cash paid for interest	$	2,156		$	7,358		$	10,401
Cash paid for income taxes		121			296			1,277
Stock-based compensation capitalized into inventory		1,006			1,710			4,612
Depreciation capitalized into inventory		2,161			1,941			2,782
Supplemental non-cash investing and financing activities disclosures:
Conversion of convertible notes		73,560			51,440			292
Distribution of inventory resulting from the joint venture restructure		—			—			26,780
Deferred offering costs reclassified to additional paid in capital as a result of convertible notes		868			512			9
Changes in accrued liabilities related to fixed assets		965			6,726			4,462
Equipment acquired through capital lease		—			—			546

See accompanying notes to consolidated financial statements.

F-6

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2007 and 2008

(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 selects product candidates for diseases and conditions that represent a significant unmet medical need, have well-understood biology and provide an opportunity to be first-to-market or offer a significant benefit over existing products. The Company’s product portfolio is comprised of three approved products and multiple investigational product candidates. Approved products include Naglazyme^® (galsulfase), Kuvan^® (sapropterin dihydrochloride), and Aldurazyme^® (laronidase).

There were 72 common stockholders of record at December 31, 2008. No dividends have ever been paid by the Company. The Company is incorporated in the state of Delaware.

Through December 31, 2008, the Company had accumulated losses of approximately $576.6 million. Management believes that the Company’s cash, cash equivalents and short-term investments at December 31, 2008 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 $324.9 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, 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.

(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.

F-7

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

(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) Investments

The Company records its investments in debt and equity securities 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, exclusive of other-than-temporary impairment losses, if any. Short-term investments are comprised mainly of corporate securities, commercial paper, U.S. federal government agency securities, U.S. treasury bills and money market funds. As of December 31, 2008, the Company had no held-to-maturity investments.

Other investments as of December 31, 2008 are comprised of an equity investment denominated in British Pounds. The equity investment is accounted for under the provisions of Statement of Financial Accounting Standard (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities. The Company classified the investment as available-for-sale and accordingly the investment is recorded at fair market value. Changes in the fair value are reported as a component of accumulated other comprehensive income, exclusive of other-than-temporary impairment losses, if any. Translation gains/losses on this non-monetary asset resulting from fluctuations in foreign exchange rates are included in accumulated other comprehensive income under the provisions of SFAS No. 52, Foreign Currency Translation. Losses related to changes in market value and exchange rates determined to be other-than-temporary are reported in earnings in the period in which the impairment occurs.

(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.

United States regulatory approval for Kuvan was received in December 2007, and manufacturing costs for this product prior to this date were expensed as research and development expenses. The Company considers regulatory approval of product candidates to be uncertain, and product manufactured prior to regulatory approval may not be sold unless regulatory approval is obtained. As such, the manufacturing costs for Kuvan prior to regulatory approval were not capitalized as inventory. When regulatory approval was obtained, the Company began capitalizing inventory at the lower of cost or net realizable value.

In the first quarter of 2008, the Company received $26.8 million of inventory distributed by the Company’s joint venture with Genzyme pursuant to the terms of the joint venture restructuring (see Note 5 for further information). The inventory distribution was recorded at the historical production cost, which represented the lower of cost or market value.

Stock-based compensation of $1.7 million and $4.6 million were capitalized into inventory for the years ended December 31, 2007 and 2008, respectively.

F-8

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

See Note 7 for further information on inventory balances as of December 31, 2007 and 2008.

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

Effective January 1, 2008, the Company restructured its relationship with Genzyme (see Note 5 for further information). The Company accounts for its remaining 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 (loss) of BioMarin/Genzyme LLC includes the Company’s 50% share of the joint venture’s loss/income for the period. 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 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 4 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 and 2008, the Company had only one 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 Company determines the fair value of its reporting unit using quoted market prices.

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

F-9

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

research and development projects with no alternative uses are expensed as incurred. See Note 8 for further information on property, plant and equipment balances as of December 31, 2007 and 2008.

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 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 (SAB 104), and Emerging Issues Task Force Issue (EITF) No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. The Company’s revenues consist of net product revenues from Naglazyme, and Kuvan, Aldurazyme product transfer and royalty revenues beginning January 1, 2008, revenues from its collaborative agreement with Merck Serono and other license and royalty revenues. 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.

Net Product Revenues—The Company recognizes net product revenue 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. 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 accordance with EITF No. 06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement, in that taxes billed to customers are not included as a component of net product revenues.

The Company began recognizing revenue related to Aldurazyme in the first quarter of 2008, effective with the restructuring of the Company’s Aldurazyme joint venture with Genzyme (see Note 5 for further information). According to the terms of the restructuring, BioMarin receives a 39.5% to 50% royalty on worldwide net Aldurazyme sales by Genzyme depending on sales volume, which is included in net product revenue in the consolidated statements of operations. The Company recognizes a portion of this amount as product transfer revenue when product is released to Genzyme as all of the Company’s performance obligations are fulfilled at that point and title to, and risk of loss for, the product has transferred to Genzyme. The product transfer revenue represents the fixed amount per unit of Aldurazyme that Genzyme is required to pay the Company if the product is unsold by Genzyme. The amount of product transfer revenue will eventually be deducted from the calculated royalty rate when the product is sold by Genzyme. The Company records the Aldurazyme royalty revenue based on net sales information provided by Genzyme and records product transfer revenue based on the fulfillment of Genzyme purchase orders in accordance with SAB 104 and the terms of the related agreements with Genzyme. As of December 31, 2008, accounts receivable included $11.9 million of unbilled accounts receivable related to net incremental Aldurazyme product transfers to Genzyme.

The Company sells Naglazyme worldwide and sells Kuvan in the U.S. 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 sold to the Company’s authorized distributors or directly to hospitals, which act as the end-users.

F-10

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

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 limited inventory. Accordingly, the Company expects the 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 is required, including market exclusivity of the products based on their orphan drug status, the patient population, the customers’ limited return rights and the Company’s experience with returns. The Company’s products are comparable in nature and sold to similar customers with limited return rights, therefore the Company relies on historical return rates for Aldurazyme and Naglazyme to estimate returns for Kuvan, which has a limited history. Genzyme’s return rights for Aldurazyme are limited to defective 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, 2008, the Company has experienced no significant bad debts and the recorded allowance for doubtful accounts was insignificant.

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 Pharma Inc. (Sciele) in March 2006.

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’s performance obligation related to the $25.0 million upfront payment from Merck Serono ended 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 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 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, $6.9 million and $5.2 million of the up-front license fee received from Merck Serono recognized as revenue during 2006, 2007 and 2008, respectively, and $11.3 million, $6.4 million and $3.7 million of reimbursable development costs for Kuvan, received during 2006, 2007 and 2008, 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

F-11

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

revenue during the period, and the $30.0 million milestone payment due from Merck Serono upon marketing approval for Kuvan in the E.U. and recognized as revenue during 2008.

Royalty and license revenues—Royalty revenue includes royalties on net sales of products with which the Company has no direct involvement and is recognized based on data reported by licensees or sublicensees. 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.

Due to the significant role the Company plays in the operations of Aldurazyme, primarily the manufacturing and regulatory activities, as well as the rights and responsibilities to deliver the product to Genzyme, the Company elected not to classify the Aldurazyme royalty as other royalty revenues.

Royalty and license revenues include royalty revenues from Orapred product sold by Sciele Pharma, Inc. (Sciele), the sublicensee of the Orapred product line, of $2.5 million, $2.3 million, and $3.8 million for the years ended December 31, 2006, 2007, and 2008, respectively. During the third quarter of 2008, the Company earned a $1.5 million milestone payment related to the Japanese approval of Kuvan in July 2008. There is no cost of sales associated with the royalty and license revenues recorded during the periods and no related costs are expected in future periods.

In the second quarter of 2007, the Company recognized the $4.0 million milestone as a result of the one year anniversary of the receipt of approval from the Food and Drug Administration (FDA) 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 the 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 it became due and payable. In making this determination, management considered the extended one-year payment term, the related uncertain future product sales, and the Company’s lack of experience with Sciele. 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 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 in a major market, at which time inventory is capitalized at the lower of cost or net realizable value.

(k) Net Income (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

F-12

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

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, restricted stock units, and contingent issuances of common stock related to convertible debt and acquisition payable. For 2006 and 2007, 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 for the years ended December 31, 2006 and 2007, include (in thousands):

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

The following represents a reconciliation from basic weighted shares outstanding to diluted weighted shares outstanding and the earnings per share for the year ended December 31, 2008 (in thousands, except per share data):

	Year Ended December 31, 2008
	Net Income (Numerator)			Weighted Average Shares Outstanding (Denominator)	Per Share Amount
Basic Earnings Per Share:
Net Income	$	30,831		98,975	$	0.31
Effect of dilutive shares:
Stock options using the treasury method		—		3,837		—
Nonqualified deferred compensation plan obligation using the treasury method		(308	)	32		—
Portion of acquisition obligation payable in common stock at the option of the Company		—		483		—
Potentially issuable common stock for ESPP		—		245		—
Diluted Earnings Per Share:
Net Income	$	30,523		103,572	$	0.29

In addition to the options included in the above table, options to purchase approximately 5.3 million shares of common stock and 225,255 restricted stock units were outstanding during the twelve months ended December 31, 2008, but were not included in the computation of diluted earnings per share because they were anti-dilutive during the period using the treasury stock method. These options were anti-dilutive because the fair value of the Company’s stock exceeded the assumed proceeds. Additionally, approximately 26.3 million of the underlying shares of the Company’s convertible debt were not included in the diluted average common shares outstanding because they were antidilutive during the twelve months ended December 31, 2008 using the “if-converted” method whereby the related interest expense on the convertible debt is added to net income for the period.

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

(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.

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) Deferred Compensation Plan

Other non-current assets include $0.5 million and $0.9 million, respectively, of investments held in trust related to our nonqualified deferred compensation plan for certain employees and directors as of December 31, 2007 and 2008, respectively. All of the investments held in the Company’s nonqualified deferred compensation plan are classified as trading securities and recorded at fair value in accordance with SFAS No. 115 with changes in the investments’ fair values recognized in earnings in the period they occur. Changes in the fair value are recorded in earnings in the period incurred. In accordance with EITF 97-14, Accounting for Deferred Compensation Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested, restricted stock issued into the deferred compensation plan are accounted for similarly to treasury stock in that, the value of the employer stock is determined on the date the restricted stock vests and the shares are issued into the plan. The restricted stock issued into the plan is recorded in equity and changes tin their fair value is not recognized. Additionally, the Company has recorded a corresponding liability for the deferred compensation plan in other liabilities. See Note 18 for additional discussion regarding deferred compensation.

The plan allows eligible employees, including management and certain highly-compensated employees as designated by the Plan’s Administrative Committee and the members of the Board to make voluntary deferrals of compensation to specified dates, retirement or death. Participants are permitted to defer portions of their salary, annual cash bonus and restricted stock. The Company is not allowed to make additional direct contributions to the plan on behalf of the participants without further action by the Board.

(n) 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

F-14

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

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 $294.7 million at December 31, 2008. 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, 2007 and 2008, the Company recognized $0.1 million, $0.7 million and $2.6 million of income tax expense primarily related to income earned in certain of the Company’s international subsidiaries and in 2008, included California state income tax and U.S. federal Alternative Minimum Tax expense. See Note 13 for further discussion of the Company’s income taxes.

(o) Foreign Currency and Other Hedging Instruments

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 and through the use of forward contracts. 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.

The Company accounts for its derivative instruments as either assets or liabilities on the balance sheet and measures them at fair value. Derivatives that are not defined as hedges in SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, are adjusted to fair value through earnings. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and wither it is designated and qualifies for hedge accounting. See Note 11 for further discussion of the Company’s derivative instruments.

(p) 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.

(q) Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)

Comprehensive income (loss) includes net income/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 income (loss) for the years ended December 31, 2006, 2007, and 2008 is included in the Company’s consolidated statements of stockholders’ equity. There were no tax effects allocated to any components of other comprehensive income (loss) during 2006, 2007, and 2008.

F-15

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

In 2008, the Company’s comprehensive income was approximately $31.8 million compared to comprehensive net loss of $15.6 million for the year ended December 31, 2007. The fluctuation in accumulated other comprehensive income (loss) is comprised of the following (in thousands):

	Year ended December 31,
	2007			2008
Net unrealized gain on available-for-sale securities	$	(22	)	$	1,201
Net unrealized loss on foreign currency hedges		—			(212	)
Net foreign currency translation gain (loss)		186			(22	)
Accumulated other comprehensive income	$	164		$	967

(r) Restricted Cash

The Company’s balance of restricted cash amounted to $2.9 million and $7.3 million at December 31, 2007 and 2008, respectively. The 2007 restricted cash balance is included in other assets, and $6.2 million and $1.1 million of the 2008 balance are included in other current assets and other assets, respectively. The 2007 and 2008 balances include $2.4 million and $6.2 million related to cash received for royalties pursuant to the Orapred sublicense agreement, respectively, which are restricted until August 2009. Restricted cash also includes investments of $0.5 million and $0.9 million held by the Company’s Nonqualified Deferred Compensation Plan as of December 31, 2007 and 2008, respectively. See Note 18 for further discussion on the Company’s Nonqualified Deferred Compensation Plan.

(s) Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board released Statement Financial Accounting Standard No. 141(R), Business Combinations. This Statement revises previous business combination accounting requirements and 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 would impact the Company for business combinations completed after January 1, 2009. 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 entered into by the Company that will be subject to the Statement.

In December 2007, the FASB released SFAS No. 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. The Company does not expect the adoption of SFAS No. 160 to have a material effect on its consolidated financial statements.

In December 2007, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin 110 (SAB 110). SAB 110 amends and replaces Question 6 of Section D.2 of Topic 14, “Share-Based Payment,” of the Staff Accounting Bulletin series. The Company does not expect that SAB 110 will have an impact on its financial statements.

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BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

In February 2008, the FASB Emerging Issues Task Force issued EITF Issue No. 08-1, Revenue Recognition for a Single Unit of Accounting. The staff at EITF recommends that this issue be effective for fiscal years beginning after December 15, 2008, which for the Company is the year ending December 31, 2009. The adoption of this issue is not expected to have material effect on the Company’s financial position, cash flows or results of operations.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment to SFAS No. 133 (SFAS No. 161), which changes the disclosure requirements for derivative instruments and hedging activities. This statement’s disclosure requirements are effective for the Company as of January 1, 2009. The adoption of this statement will not impact the Company’s consolidated balance sheets, results of operations or cash flows because the statement only requires additional disclosures relating to the Company’s derivative instruments.

In April 2008, the FASB issued FASB Staff Position No. FAS 142-3, Determination of the Useful Life of Intangible Assets (FSP FAS 142-3), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Asset. FSP FAS 142-3 also requires expanded disclosure related to the determination of intangible asset useful lives. This Statement is effective for fiscal years beginning on or after December 15, 2008, which for the Company is the year ending December 31, 2009. The Company is currently evaluating the potential impact the adoption of FSP FAS 142-3 will have on its consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements that are presented in conformity with generally accepted accounting principles. SFAS No. 162 becomes effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to Statement on Auditing Standards No. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles, for periods completed after January 1, 2009. The Company does not expect that the adoption of SFAS No. 162 to have a material effect on its consolidated financial statements.

In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. FSP EITF 03-6-1 clarifies that share-based payment awards that entitle their holders of unvested awards to receive non-forfeitable dividends or dividend equivalents should be considered participating securities. The Company has some grants of restricted stock that contain non-forfeitable rights to dividends and will be considered participating securities once the Company adopts FSP EITF 03-6-1. As participating securities, the Company will be required to include these instruments in the calculation of earnings per share (EPS) using the “two-class method.” The two-class method of computing EPS is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. FSP EITF 03-6-1 is effective for the first quarter of the Company’s fiscal year beginning January 1, 2009. The Company is currently evaluating the potential impact, if any, the adoption of FSP EITF 03-6-1 could have on its calculation of EPS.

In January 2009, the FASB issued FASB Staff Position No. EITF 99-20-1, Amendments to the Impairment Guidance of EITF Issue No. 99-20, (FSP EITF 99-20-1). This FSP amends the impairment guidance in EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets, to align it with the impairment guidance within Statement No. 115 by removing from EITF 99-20 the requirement to place exclusive

F-17

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

reliance on market participants’ assumptions about future cash flows when evaluating an asset for other-than-temporary impairment. Both standards will now require that assumptions about future cash flows consider reasonable management judgment about the probability that the holder of an asset will be unable to collect all amounts due The FSP is effective for interim and annual reporting periods ending after December 15, 2008, which for the Company is the year ending December 31, 2009. The application of this guidance is not expected to have a significant impact on the Company’s financial condition, results of operations or cash flows.

In October 2008, the FASB issued Staff Position No. FAS 157-3, Determining the Fair Value of a Financial Asset in a Market That Is Not Active, (FSP FAS 157-3). FSP FAS 157-3 clarifies the application of FAS 157 in a market that is not active and defines additional key criteria in determining the fair value of a financial asset when the market for that financial asset is not active. FSP FAS 157-3 applies to financial assets within the scope of accounting pronouncements that require or permit fair value measurements in accordance with FAS 157. FSP FAS 157-3 was effective upon issuance and the application of FSP FAS 157-3 did not have a material impact on the Company’s consolidated financial statements.

In November 2007, EITF issued EITF 07-1, Accounting for Collaborative Arrangements, (EITF 07-1). EITF 07-1, which will be applied retrospectively, requires expanded disclosures for contractual arrangements with third parties that involve joint operating activities and may require reclassifications to previously issued financial statements. EITF 07-1 is effective for the Company on January 1, 2009. The Company is currently evaluating the impact EITF 07-1 may have on its financial statements.

(t) Reclassifications

Certain items in the prior years’ consolidated financial statements have been reclassified to conform to the current presentation.

(3) STOCKHOLDERS’ EQUITY

(a) Share Incentive Plan

BioMarin’s 2006 Share Incentive Plan (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, 2008, awards issued under the 2006 Share Incentive Plan include both stock options and restricted stock units. Stock option awards granted to employees 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. As of December 31, 2008, options to purchase approximately 8.3 million and 3.8 million shares were outstanding under the Share Incentive Plan, and the Company’s old plans, respectively.

(b) Employee Stock Purchase Plan

Under BioMarin’s Employee Stock Purchase Plan (ESPP), 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

F-18

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

period will span up to two years. The ESPP 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 ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. As of December 31, 2008, approximately 807,000 shares had been issued under the Employee Stock Purchase Plan, and approximately 1.8 million shares had been reserved for future issuance.

(c) Board of Director Grants

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 other than a newly elected 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 one year anniversary of the date of grant.

(d) Stock-based Compensation

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, 2008 is presented as follows:

	Options		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, 2007	11,413,452		$	13.65
Granted	3,573,658		$	33.55	$	15.71
Exercised	(2,488,672	)	$	10.39				$	61,749
Expired and Forfeited	(423,286	)	$	21.25
Balance as of December 31, 2008	12,075,152		$	19.94			6.63	$	32,152
Options expected to vest as of December 31, 2008	6,187,689		$	24.37				$	5,696
Exercisable as of December 31, 2008	5,696,089		$	14.98				$	26,280

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 last trading day of fiscal 2008. There were 8.0 million options that were in-the-money at December 31, 2008. The aggregate intrinsic value of options exercised was determined as of the date of option exercise. Upon the exercise of the options the Company issues new common stock from its authorized shares.

At December 31, 2008, an aggregate of approximately 14.4 million unissued shares were authorized for future issuance under the Share Incentive Plan.

F-19

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

The following table presents the composition of options outstanding and exercisable as of December 31, 2008:

	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
$ 0.00 to 7.34	826,531	5.50	$	6.22	789,042	$	6.22
7.35 to 10.55	941,082	4.91		8.79	898,794		8.78
10.56 to 14.06	2,042,524	6.66		12.24	1,400,153		12.24
14.07 to 17.58	4,066,383	8.08		17.13	1,805,058		17.12
17.59 to 21.10	965,358	9.26		18.04	123,997		18.28
21.11 to 24.61	352,427	5.46		22.43	200,044		22.12
24.62 to 28.13	224,418	9.00		26.79	41,793		26.51
28.14 to 31.65	38,650	9.57		28.94	1,173		29.12
31.66 to 35.17	103,050	9.17		33.68	21,415		33.85
35.17 to 40.99	2,514,729	9.36		38.51	414,620		38.50
	12,075,152				5,696,089

The weighted average grant date fair value of options granted during the years ended December 31, 2006, 2007, and 2008, was $7.66, $9.22 and $15.71 per share, respectively.

The fair value of each option award is estimated on the grant date 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, 2008. 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 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. The weighted-average assumptions for options granted under the Share Incentive Plan for the years ended December 31, 2006, 2007, and 2008, respectively are as follows:

	Year Ended December 31,
Stock Option Valuation Assumptions	2006		2007		2008
Expected volatility	52.2-57.9	%	44.4-50.8	%	44.7-51.4	%
Dividend yield	0.0	%	0.0	%	0.0	%
Expected life	4.9-5.3 years		5.2-5.5 years		5.2-5.8 years
Risk-free interest rate	4.4-5.1	%	3.7-5.1	%	1.4-3.2	%

The Company recorded $9.0 million, $16.8 million and $21.2 million of compensation costs related to current period vesting of stock options for the years ended December 31, 2006, 2007, and 2008, respectively. As of December 31, 2008, there was $73.0 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.

F-20

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

The fair value of each award granted under the ESPP 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 ESPP 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 Valuation Assumptions	2006		2007		2008
Expected volatility	44-55	%	44-54	%	47-51	%
Dividend yield	0.0	%	0.0	%	0.0	%
Expected life	6-24 months		6-24 months		6- 24 months
Risk-free interest rate	2.7-5.2	%	3.8-5.2	%	1.1-2.4	%

The Company recorded $0.6 million, $1.4 million, and $1.1 million of compensation costs related to options granted under the ESPP for the years ended December 31, 2006, 2007, and 2008, respectively. As of December 31, 2008, there was $2.3 million of total unrecognized compensation cost related to unvested stock options. These costs are expected to be recognized over a weighted average period of 1.4 years.

A summary of non-vested restricted stock unit activity under the plan for the year ended December 31, 2008 is presented as follows:

	Shares		Weighted Average Grant Date Fair Value
Non-vested units as of December 31, 2007	116,625		$	17.39
Granted	160,755			38.08
Vested	(39,125	)		16.66
Forfeited	(13,000	)		28.78
Non-vested units as of December 31, 2008	225,255		$	31.06

The Company recorded $0.3 million and $1.4 million of compensation costs related to restricted stock units for the years ended December 31, 2007 and 2008, respectively. Prior to 2007, the Company did not grant restricted stock units, as such there was no stock-based compensation associated with restricted stock in 2006. As of December 31, 2008, there was $5.7 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 3.1 years.

The compensation expense that has been included in the Company’s consolidated statement of operations for stock-based compensation arrangements were as follows (in thousands):

	December 31,
	2006		2007		2008
Cost of sales	$	—	$	578	$	1,521
Selling, general and administrative expense		5,348		10,727		15,145
Research and development expense		4,242		6,978		8,584
Total stock-based compensation expense	$	9,590	$	18,283	$	25,250

F-21

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

There was no income tax benefit associated with stock-based compensation for 2007 and 2008 because the deferred tax asset resulting from stock-based compensation was offset by an additional valuation allowance for deferred tax assets.

Stock-based compensation of $1.7 million and $4.6 million was capitalized into inventory for the years ended December 31, 2007 and 2008, respectively. Capitalized stock-based compensation is recognized into cost of sales when the related product is sold.

At December 31, 2008, an aggregate of approximately 25.9 million unissued shares were authorized for future issuance under the Company’s stock plans, which include shares issuable under the Share Incentive Plan and the Company’s ESPP. Under the Share Incentive Plan, awards 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.

(e) 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.

(f) Stockholders’ Rights Plan

In 2002, the Board of Directors authorized a stockholders’ rights plan, which was amended and restated on February 27, 2009. 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 the Company’s Series B Junior Participating Preferred Stock that have significantly superior dividend, liquidation, and voting rights compared to the Company’s 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. As of December 31, 2008 no stock rights have been granted under this plan.

(4) INTANGIBLE ASSETS AND GOODWILL

As of December 31, 2007 and December 31, 2008, intangible assets consisted of the following (in thousands):

	December 31,
	2007			2008
Orapred	$	20,437		$	20,437
Kuvan		2,327			5,093
Less: Accumulated amortization		(13,168	)		(17,904	)
Net carrying value	$	9,596		$	7,626

F-22

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

(a) Orapred

In 2004, the Company acquired the Orapred product line from Ascent Pediatrics, a wholly owned subsidiary of Medicis Pharmaceutical Corporation (Medicis). 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 total consideration has been allocated based on an estimate of the fair value of assets acquired and liabilities assumed.

The amended transaction agreements entered into with Medicis following the settlement of a dispute in January 2005 in the Company’s favor, provided for total acquisition payments of $169.0 million payable to Medicis in specified amounts through 2009. At December 31, 2008 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 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 subject to an annual impairment analysis under the provisions of SFAS No.142, Goodwill and Other Intangible Assets (SFAS 142). The entire amount of goodwill is expected to be deductible for tax purposes.

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.

The Orapred intangible assets consist of the Orapred product technology as of December 31, 2007 and 2008. The gross and net carrying value of the Orapred product technology was as follows (in thousands):

	December 31,
	2007			2008
Gross value	$	20,437		$	20,437
Accumulated amortization		(13,152	)		(17,524	)
Net carrying value	$	7,285		$	2,913

The Company completed its 2008 annual impairment test during the fourth quarter of 2008, according to the provisions of SFAS 142, and determined that no impairment of goodwill or the Orapred intangible asset existed as of December 31, 2008.

Amortization expense related to the Orapred intangible for the years ended December 31, 2006, 2007 and 2008 was $3.7 million, $4.4 million, and $4.4 million, respectively. The remaining $2.9 million Orapred intangible asset balance will be amortized in 2009.

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.

In March 2006, the Company entered into a license agreement with a third party for the continued sale and commercialization of Orapred and other Orapred formulations then under development. Through the agreement,

F-23

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

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.

(b) Kuvan Intangible Assets

Kuvan intangible assets relate to license payments made to third parties as a result of the FDA approval of Kuvan in December 2007 and the EMEA approval in December 2008, which resulted in a $2.7 million addition to the Kuvan intangible assets. At December 31, 2008, Kuvan intangible assets totaled a gross value of $5.1 million. Amortization expense related to the Kuvan intangible assets is included as a component of cost of sales in the consolidated statements of operations, and totaled $0.4 million for the year ended December 31, 2008. Amortization expense for the year ended December 31, 2007 was insignificant. The Company completed its 2008 annual impairment test during the fourth quarter of 2008, according to the provisions of SFAS 142, and determined that no impairment of the Kuvan intangible assets existed as of December 31, 2008.

The following table summarizes the annual amortization of the Kuvan intangible assets through 2018 (in thousands):

	Net Balance at December 31, 2008		Remaining Life	Annual Amortization
License payment for FDA Approval	$	1,979	6 years	$	332
License payment for EMEA Approval		2,733	10 years		277
Total	$	4,712		$	609

(5) JOINT VENTURE

Effective January 2008, the Company and Genzyme restructured BioMarin/Genzyme LLC. Under the revised structure, the operational responsibilities for BioMarin and Genzyme did not significantly change, as Genzyme continues to globally market and sell Aldurazyme and BioMarin continues to manufacture Aldurazyme. The restructuring had two significant business purposes. First, since each party now has full control over its own operational responsibilities, without the need to obtain the approval of the other party, and the parties do not need to review and oversee the activities of the other, it reduces management’s time and effort and therefore improves overall efficiencies. Second, since each party will realize 100% of the benefit of their own increased operational efficiencies, it increases the incentives to identify and implement cost saving measures. Under the previous 50/50 structure, each company shared 50% of the expense associated with the other’s inefficiencies and only received 50% of the benefit of its own efficiencies. Specifically, the Company will be able to realize the full benefit of any manufacturing cost reductions and Genzyme will be able to realize the full benefit of any sales and marketing efficiencies.

As of January 1, 2008, instead of sharing all costs and profits equally through the 50/50 joint venture, Genzyme records sales of Aldurazyme to third party customers and pays BioMarin a tiered payment ranging from approximately 39.5% to 50% of worldwide net product sales depending on sales volume, which is recorded by BioMarin as product revenue. The Company recognizes a portion of this amount as product transfer revenue when product is released to Genzyme as all of the Company’s performance obligations are fulfilled at this point

F-24

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

and title to, and risk of loss, for the product has transferred to Genzyme. The product transfer revenue represents the fixed amount per unit of Aldurazyme that Genzyme is required to pay the Company if the product is unsold by Genzyme. The amount of product transfer revenue is deducted from the calculated royalty rate when the product is sold by Genzyme. Genzyme’s return rights for Aldurazyme are limited to defective product. Certain research and development activities and intellectual property related to Aldurazyme continues to be managed in the joint venture with the costs shared equally by BioMarin and Genzyme. Pursuant to the terms of the joint venture restructuring, the Company received distributions of $16.7 million of cash and $26.8 million of inventory from the joint venture in the first quarter of 2008.

The Company presents the related cost of sales and its Aldurazyme-related operating expenses as operating expenses in the consolidated statements of operations. Equity in the income (loss) of BioMarin/Genzyme LLC subsequent to the restructuring includes BioMarin’s 50% share of the net income/loss of BioMarin/Genzyme LLC related to intellectual property management and ongoing research and development activities.

The results of the joint venture’s operations for the years ended December 31, 2006, 2007 and 2008, are presented in the table below (in thousands). Equity in the income (loss) of BioMarin/Genzyme LLC for the years ended December 31, 2006 and 2007 represents the Company’s 50% share of the joint venture’s income for the periods presented prior to the restructuring.

	Year ended December 31,
	2006		2007		2008 (unaudited)
Revenue	$	96,291	$	123,671	$	—
Cost of goods sold		23,173		26,877		—
Gross profit		73,118		96,794		—
Operating expenses		35,262		36,510		4,738
Income (loss) from operations		37,856		60,284		(4,738	)
Other income		692		766		198
Net income (loss)	$	38,548	$	61,050	$	(4,540	)
Equity in the income (loss) of BioMarin/Genzyme LLC	$	19,274	$	30,525	$	(2,270	)

At December 31, 2007 and 2008, 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,
	2007			2008 (unaudited)
Assets	$	98,340		$	2,991
Liabilities		(8,577	)		(1,161	)
Net equity	$	89,763		$	1,830
Investment in BioMarin/Genzyme LLC (50% share of net equity)	$	44,881		$	915

F-25

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

(6) SHORT-TERM INVESTMENTS

At December 31, 2008, the principal amounts of short-term investments by contractual maturity are summarized in the table below (in thousands).

	Contractual Maturity Date For the Years Ending December 31,				December 31, 2008
	2009		Total Book Value		Unrealized Gain		Aggregate Fair Value
Corporate securities	$	57,270	$	57,270	$	232	$	57,502
Commercial paper		33,076		33,076		48		33,124
U.S. Government backed commercial paper		24,370		24,370		5		24,375
U.S. Government agency securities		220,914		220,914		977		221,891
Total	$	335,630	$	335,630	$	1,262	$	336,892

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		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 agency securities		9,798		9,798		6			9,804
Total	$	357,189	$	357,189	$	62		$	357,251

At December 31, 2008, the aggregate amount of unrealized losses and related fair value of investments with unrealized losses were as follows (in thousands):

	Less Than 12 Months To Maturity					Total
	Aggregate Fair Value		Unrealized Losses			Aggregate Fair Value		Unrealized Losses
Corporate securities	$	44,941	$	(147	)	$	44,941	$	(147	)
Commercial paper		1,992		(6	)		1,992		(6	)
U.S. Government backed commercial paper		9,947		(31	)		9,947		(31	)
U.S. Government agency securities		6,928		(12	)		6,928		(12	)
Total	$	63,808	$	(196	)	$	63,808	$	(196	)

The Company completed an evaluation of its short-term investments and determined that it did not have any other-than-temporary impairments as of December 31, 2008. The investments are placed in financial institutions with strong credit ratings and management expects full recovery of the amortized cost.

F-26

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

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 To Maturity					Total
	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	)
Total	$	49,774	$	(136	)	$	49,774	$	(136	)

(7) SUPPLEMENTAL BALANCE SHEET INFORMATION

As of December 31, 2007 and December 31, 2008, inventory consisted of the following (in thousands):

	December 31, 2007		December 31, 2008
Raw materials	$	5,695	$	10,314
Work in process		14,458		29,998
Finished goods		12,292		32,850
Total inventory	$	32,445	$	73,162

As of December 31, 2007 and December 31, 2008, other current assets consisted of the following (in thousands):

	December 31, 2007		December 31, 2008
Approval milestone receivable from Merck Serono	$	—	$	30,000
Non-trade receivables		4,475		4,828
Prepaid expenses		1,850		3,013
Deferred cost of goods sold		—		3,879
Short-term restricted cash		—		6,202
Other		870		2,348
Total other current assets	$	7,195	$	50,270

F-27

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

As of December 31, 2007 and December 31, 2008, accounts payable and accrued liabilities consisted of the following (in thousands):

	December 31, 2007		December 31, 2008
Accounts payable	$	1,169	$	922
Accrued accounts payable		27,377		26,214
Accrued vacation		2,820		3,798
Accrued compensation		9,931		11,737
Accrued interest and taxes		2,533		2,684
Accrued royalties		1,329		3,401
Other accrued expenses		1,154		6,094
Accrued rebates		1,816		3,194
Acquired rebates and returns reserve		743		621
Short-term portion of deferred compensation liability		859		19
Other		176		167
Total accounts payable and accrued liabilities	$	49,907	$	58,851

As of December 31, 2007 and December 31, 2008, other long-term liabilities consisted of the following (in thousands):

	December 31, 2007		December 31, 2008
Long-term portion of deferred rent	$	1,635	$	1,176
Long-term portion of capital lease liability		—		270
Long-term portion of deferred compensation liability		447		1,410
Total other long-term liabilities	$	2,082	$	2,856

A roll forward 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
Acquired rebate reserve		100		—		590			—			(449	)		241
Acquired returns reserve		1,546		—		(389	)		—			(491	)		666
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
Acquired rebate reserve		241		—		(11	)		—			(108	)		122
Acquired returns reserve		666		—		—			—			(45	)		621
Reserve for cash discounts		21		298		—			(267	)		(18	)		34
Year ended December 31, 2008:
Returns reserve	$	61		—		1			—			(62	)		—
Accrued rebates		1,816		3,357		—			(1,684	)		(295	)		3,194
Acquired rebate reserve		122		—		(122	)		—			—			—
Acquired returns reserve		621		—		—			—			—			621
Reserve for cash discounts		34		1,412		—			(1,182	)		(21	)		243

F-28

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

(8) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at December 31, 2007 and December 31, 2008, consisted of (in thousands):

	December 31,						Estimated Useful Lives
Category	2007			2008
Leasehold improvements	$	33,583		$	27,544		Shorter of life of asset or lease term
Building and improvements		26,784			61,183		20 years
Manufacturing and laboratory equipment		19,403			26,996		5 years
Computer hardware and software		9,657			13,088		3 years
Office furniture and equipment		3,991			4,602		5 years
Land		4,259			10,056		Not applicable
Construction-in-progress		13,952			27,589		Not applicable
	$	111,629		$	171,058
Less: Accumulated depreciation		(34,811	)		(46,079	)
Total property, plant and equipment, net	$	76,818		$	124,979

Depreciation for the years ended December 31, 2006, 2007, and 2008 was, $6.8 million, $7.8 million and $11.4 million, respectively. Depreciation capitalized into inventory for the years ended December 31, 2007 and 2008 was $1.2 million and $2.8 million, respectively.

Capitalized interest related to the Company’s fixed asset purchases during the years ended December 31, 2007 and 2008 was insignificant.

In January 2008, the Company purchased its previously leased laboratory/office building located at 300 Bel Marin Keys Drive, Novato, California for approximately $12.0 million. As a result of the purchase, the Company capitalized certain pre-existing deferred rent liabilities of approximately $0.5 million as a reduction to the acquisition cost of the building.

(9) INVESTMENT IN SUMMIT CORPORATION PLC

On July 21, 2008, the Company entered into an exclusive worldwide licensing agreement with Summit Corporation plc (Summit) related to Summit’s preclinical candidate SMT C1100 and follow-on molecules, which are being developed for the treatment of Duchenne muscular dystrophy (DMD). The Company paid Summit $7.1 million for an equity investment in Summit shares and licensing rights to SMT C1100. The initial equity investment represents the acquisition of approximately 5.1 million Summit shares with a fair value of $5.7 million, based on publicly available quotes. The Company’s investment in Summit represents less than 10% of Summit’s outstanding shares. The $1.4 million paid in excess of the fair value of the shares acquired was allocated to the license fee using the residual method and expensed under the provisions of SFAS No. 2, Accounting for Research and Development Costs, in the third quarter of 2008. The Company is also obligated to make future development and regulatory milestone payments totaling $51.0 million contingent on future development and regulatory milestones, as well as tiered royalties based on future net sales. All payments pursuant to the Company’s investment in, and license from Summit are denominated in British pounds.

The Company accounts for the Summit shares, which are traded on the London Stock Exchange, under the provisions of SFAS No. 115. The investment is classified as available-for-sale, with changes in the fair value reported as a component of accumulated other comprehensive income/loss, exclusive of other-than-temporary impairment losses, if any. Losses determined to be other-than-temporary are reported in earnings in the period in which the impairment occurs.

F-29

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

In 2008, the Company recorded an impairment charge of $4.1 million for the decline in the investment’s value determined to be other-than-temporary. The determination that the decline was other-than-temporary is, in part, subjective and influenced by several factors including: the length of time and to the extent to which the market value had been less than the value on the date of purchase, Summit’s financial condition and near-term prospects, including any events which may influence their operations, and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for the anticipated recovery in market value. Based on the current market conditions, the low volume of trading in Summit securities and their current financial condition, the Company determined that its investment in Summit was other-than-temporarily impaired and adjusted the recorded amount of the investment to the stock’s market price on December 31, 2008.

(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. These costs are being amortized as interest expense over the life of the debt, and the Company recognized $0.6 million and $0.9 million of amortization expense during the year ended December 31, 2007 and 2008, respectively.

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. These costs are being amortized as interest expense over the life of the debt, and the Company recognized $0.6 million, $0.8 million and $0.8 million of amortization expense during the year ended December 31, 2006, 2007, and 2008, respectively.

Interest expense for the years ended December 31, 2006, 2007 and 2008 was, $13.4 million, $14.2 million, and $16.4 million, respectively, and included $4.7 million, $4.5 million and $4.4 million in imputed interest 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, 2006, 2007 and 2008 was insignificant.

(11) DERIVATIVE FINANCIAL INSTRUMENTS

Foreign Currency and Other Hedging Instruments

The Company follows the provisions of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. SFAS No. 133 establishes accounting and reporting standards for derivative instruments

F-30

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

and hedging activities and requires the Company to recognize these as either assets or liabilities on the balance sheet and measure them at fair value. The accounting for gains and losses resulting from changes in fair value is dependent on the use of the derivative and whether it is designated and qualifies for hedge accounting.

Economic and Accounting Hedging—Hedges of Forecasted Transactions

The Company uses forward foreign exchange contracts to hedge certain operational exposures resulting from changes in foreign currency exchange rates. Such exposures result from portions of our forecasted revenues being denominated in currencies other than the U.S. dollar, primarily the Euro. These foreign exchange contracts have durations of six months or less and are entered into in the normal course of business; as such they are not speculative.

All hedging relationships are formally documented at the inception of the hedge and must meet the definition of highly effective in offsetting changes to future cash flows within the meaning of SFAS No. 133 to be a qualifying hedge. The effectiveness of the qualifying hedge contract, excluding the time value of money, is assessed quarterly using regression analysis. The Company records changes in the fair value of the derivative instruments designated as qualifying hedges of forecasted non-U.S. dollar revenue from product sales in other current assets and other current liabilities. Gains or losses resulting from changes in the fair value of qualifying hedges is initially reported as a component of accumulated other comprehensive income/loss in stockholders’ equity, until the forecasted transaction occurs. When the forecasted transaction occurs this amount is reclassified into revenue. As of December 31, 2008, the Company expects the entire amount in other comprehensive income to be reclassified to earnings within twelve months. Any non-qualifying portion of the gains or losses resulting from changes in fair value, if any, is reported in the Company’s consolidated statement of operations in operating expenses.

In the event the underlying forecasted transaction does not occur, or it becomes probable that the forecasted transaction will not occur, the gain or loss on the related hedge is reclassified from accumulated other comprehensive income/loss to other income on the consolidated statement of income at that time. During 2008, there were no such net gains or losses recognized.

As of December 31, 2008, the Company had open contracts totaling $43.2 million that qualified for hedge accounting and $0.2 million in other comprehensive income representing the anticipated loss to be reclassified to earnings over the next twelve months as the forecasted transactions occur. During 2008, the Company recognized a net gain of $1.9 million in revenue relating to hedged transactions which occurred. The ineffective portion of the gains or losses resulting from changes in fair value was insignificant. The loss representing time value excluded from the assessment of the hedge effectiveness was immaterial and is included in operating expense on the Company’s consolidated statement of operations.

The Company did not enter into any derivative transactions which qualified for hedge accounting under SFAS No. 133, as amended, prior to the second quarter of 2008.

(12) FAIR VALUE MEASUREMENTS

In January 2008, the Company adopted SFAS No. 157, “Fair Value Measurements”, for financial assets and liabilities. SFAS No. 157 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level one involves observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities. Level two involves inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, which include quoted prices for similar assets or

F-31

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level three involves unobservable inputs that reflect the reporting entity’s own assumptions. The Company measures certain financial assets and liabilities at fair value on a recurring basis, including available-for-sale fixed income and equity securities, other equity securities and foreign currency derivatives. The table below presents the fair value of these certain financial assets and liabilities determined using the inputs defined at December 31, 2008, by SFAS No. 157.

In February 2008, the FASB issued FASB FSP 157-2, which delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements at least annually until fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The partial adoption of SFAS No. 157 for financial assets and liabilities did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

	Fair Value Measurements (in thousands) at Reporting Date Using:
	Total		Quoted Price in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market instruments and overnight deposits (1)	$	222,900	$	12,959	$	209,941	$	—
Corporate equity securities (2)		59,135		2,332		56,803		—
Government agency securities (2)		221,891		—		221,891		—
Government backed commercial paper (2)		24,370		—		24,370		—
Commercial paper (2)		33,124		—		33,124		—
Foreign currency derivatives (3)		803		—		803		—
Total	$	562,223	$	15,291	$	546,932	$	—
Liabilities:
Deferred compensation liability (4)	$	1,428	$	—	$	1,428	$	—
Foreign currency derivatives (5)		1,129		—		1,129		—
Total	$	2,557	$	—	$	2,557	$	—

(1) Included in cash and cash equivalents investments in the Company’s consolidated balance sheet.

(2) 99.5% and 0.5% included in short-term investments and other investments, respectively, in the Company’s consolidated balance sheet.

(3) Included in other current assets on the Company’s consolidated balance sheet. Foreign currency derivatives include forward foreign exchange contracts for the Euro and British Pound.

(4) Included in other long-term liabilities on the Company’s consolidated balance sheet.

(5) Included in accounts payable and accrued liabilities on the Company’s consolidated balance sheet.

(13) INCOME TAXES

The Company generated net losses since its inception in 1997 until 2008. As of December 31, 2008, the Company had federal operating loss carryforwards of approximately $299.2 million and state operating loss carryforwards of approximately $148.5 million. The Company also had federal research and development and orphan drug credit carryforwards of approximately $93.6 million as of December 31, 2008, and state research

F-32

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

credit carryovers of approximately $22.9 million. The federal net operating loss and credit carryforwards expire at various dates beginning in the year 2019 through 2027, if not utilized. The state net operating loss carryforwards will begin to expire in 2020 and will completely expire in 2029 if not utilized. Certain state research credit carryovers will begin to expire in 2020 if not utilized with others carrying over indefinitely. The Company also has Canadian net operating loss carryforwards of $3.7 million and research credit carryovers of $5.5 million 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,
	2007			2008
Net deferred tax assets:
Net operating loss carryforwards	$	124,512		$	114,536
Credit and contribution carryforwards		118,208			117,254
Capitalized research expenses		4,240			3,664
Property, plant and equipment		8,280			8,041
Accrued expenses, reserves, and prepaids		3,906			11,130
Intangible assets		35,263			33,356
Deferred revenue		2,137			425
Stock-based compensation		19			6,275
Impairment on investment		—			1,882
Other		116			(222	)
Gross deferred tax assets	$	296,681		$	296,341
Deferred tax liability related to joint venture basis difference		(2,280	)		(1,601	)
Valuation allowance		(294,401	)		(294,740	)
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 long-term profitability of the Company is uncertain as of December 31, 2008. The net valuation allowance increased by $1.4 million in 2007 and $0.3 million in 2008. The decrease in the gross amount of net deferred tax assets and net valuation allowance during 2008 is primarily attributed to the expected usage of approximately $12.5 million of federal NOLs and state tax credits offset expected 2008 federal taxable income and state income taxes payable.

As of December 31, 2008, approximately $65.1 million of the federal net operating loss carryforwards and $46.7 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.

F-33

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

For the years ended December 31, 2006, 2007 and 2008, the Company recognized $0.1 million, $0.7 million and $2.6 million of income tax expense, respectively, primarily related to income earned in several of the Company’s international subsidiaries, and in 2008 included California state income tax and U.S. federal Alternative Minimum Tax. In addition, the Company recognized income tax expense as a result of accounting for income taxes under the provisions of SFAS 109. The Company had no current U.S. federal income tax expense and current state income tax expense for the years ended December 31, 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,
	2006		2007		2008
Federal tax	35.0	%	35.0	%	35.0	%
State tax	—		—		3.1	%
Permanent items	(10.4	)%	(55.0	)%	(29.1	)%
General business credits	26.9	%	95.4	%	4.4	%
Foreign income tax	(0.3	)%	(4.8	)%	2.4	%
Alternative minimum tax	(0.4	)%	—		2.1	%
Valuation allowance	(51.1	)%	(75.4	)%	(10.3	)%
Effective income tax rate	(0.3	)%	(4.8	)%	7.6	%

	December 31,
	2006		2007		2008
Federal income tax expense	$	—	$	—	$	716
State income tax expense		—		—		1,055
Foreign income tax expense		74		729		822
Total income tax expense	$	74	$	729	$	2,593

The Company adopted the provisions of 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, 2008 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 by the Company to date through December 31, 2008.

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 before 2003, the Company is no longer subject to audit by the U.S. federal, state, local, or non-U.S. tax authorities. However, 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 audits.

F-34

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

In accordance with APB 23, deferred taxes have not been provided on the cumulative undistributed earnings approximating $0.4 million as of December 31, 2008, 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.

(14) REVENUE AND CREDIT CONCENTRATIONS

The Company considers there to be revenue concentration risks for regions where net product revenue exceeds 10% of consolidated net product revenue. The concentration of the Company’s revenue within the regions below may expose the Company to a material adverse effect if sales in the respective regions were to experience difficulties. The table below summarizes product revenue concentrations based on patient location for the years ended December 31, 2006, 2007 and 2008.

	December 31,
	2006		2007		2008
Region:
United States	37	%	21	%	56	%
Europe	56	%	60	%	25	%
Latin America	1	%	7	%	10	%
Rest of World	6	%	12	%	9	%
Total Net Product Revenue	100	%	100	%	100	%

As of December 31, 2008, accounts receivable related to net product sales of Naglazyme and Kuvan and Aldurazyme product transfer and royalty revenues. On a consolidated basis, four customers accounted for 66% of our net product revenues in 2008. On a consolidated basis, two customers accounted for 17% and 50% of the December 31, 2008, accounts receivable balance, respectively. 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.

(15) COLLABORATIVE AGREEMENTS

(a) 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.

Pursuant to the agreement, Merck Serono paid BioMarin $25.0 million as consideration for executing the agreement, and is required to 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

F-35

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

with Kuvan for the treatment of PKU. The $45.0 million in Kuvan approval milestones were received in two payments of $15.0 million and $30.0 million during 2007 and 2008, respectively, when the EMEA filing was accepted and E.U. marketing approval was obtained. 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, 2007 deferred revenue included $5.2 million related to the remaining unamortized up-front license fee which was recognized in 2008, when our performance obligations were satisfied. As of December 31, 2007 and 2008 accounts receivable included $0.9 million due from Merck Serono for reimbursable development costs for Kuvan.

(b) 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.

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.

(16) 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 2019. 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):

2009	$	3,894
2010		4,026
2011		3,562
2012		2,919
2013		2,584
Thereafter		40
Total	$	17,025

Rent expense for the years ended December 31, 2006, 2007 and 2008 was $3.1 million, $3.9 million, and $3.6 million, respectively. Deferred rent accruals at December 31, 2008 totaled $1.3 million, of which $0.2 million was current. At December 31, 2007, deferred rent accruals totaled $1.7 million, of which $0.1 million was current.

(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.

F-36

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

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, 2008, such minimum annual commitments are approximately $0.3 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 cash flows, financial condition or results of operations. The Company is also subject to contingent payments totaling approximately $111.7 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.

(17) RELATED-PARTY TRANSACTIONS

The Company’s Chief Medical Officer, 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 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 Company’s joint venture partner to pay LA Biomedical a royalty on sales of Aldurazyme through November 2019. Pursuant to the officer’s agreements with LA Biomedical, which were entered into on or to his employment with the Company, the officer is entitled to certain portions of these amounts payable to LA Biomedical. The license agreements were effective before the officer was a BioMarin employee. Pursuant to these agreements, the officer was entitled to approximately $1.1 million, $1.4 million and $1.8 million from Genzyme related to Aldurazyme during 2006, 2007 and 2008, respectively.

(18) 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.

(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

F-37

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2007 and 2008

compensation or $4,000 per year. The Company’s matching contribution vests over four years from employment commencement and was approximately $0.6 million, $0.8 million and $1.3 million for the years ended December 31, 2006, 2007 and 2008, 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 $0.5 million and $0.9 million and the related deferred compensation liability of $0.5 million and $1.4 million were recorded as of December 31, 2007 and 2008, respectively. The change in market value was insignificant for the years ended December 31, 2006 and 2007 and amounted to a gain of approximately $0.3 million in 2008.

(19) SUBSEQUENT EVENT

On January 6, 2009, the Company entered into a co-exclusive worldwide (excluding Asia Pacific) licensing agreement with La Jolla Pharmaceutical Company (La Jolla) to develop and commercialize Riquent, La Jolla’s investigational drug for lupus nephritis. Riquent was being evaluated by La Jolla in an international double blind, placebo controlled randomized phase 3 clinical study for lupus nephritis (Phase 3 ASPEN Study). On February 12, 2009, the results of the first interim efficacy analysis for the Phase 3 ASPEN Study clinical trial were announced, and the Independent Data Monitoring Board determined that the continuation of the trial was futile. Based on the results of this interim efficacy analysis, the Company and La Jolla have decided to stop the study, unblind all of the data and evaluate all of the clinical results, including the secondary endpoints.

Under the terms of the agreement, the Company made an initial upfront payment of $15.0 million in exchange for the license rights and 339,104 shares of La Jolla’s Series B Preferred Stock. The Company expects to recognize up to $15.0 million of expense related to the upfront payment in the first quarter of 2009, which includes both the research and development expense and an expected impairment of the Company’s investment in La Jolla.

F-38

EX-3.3

Exhibit 3.3

AMENDED AND RESTATED BYLAWS

OF

BIOMARIN PHARMACEUTICAL INC.

TABLE OF CONTENTS

		Page
ARTICLE I CORPORATE OFFICES		1
1.1	REGISTERED OFFICE	1
1.2	OTHER OFFICES	1
ARTICLE II MEETINGS OF STOCKHOLDERS		1
2.1	PLACE OF MEETINGS	1
2.2	ANNUAL MEETING	1
2.3	SPECIAL MEETING	1
2.4	NOTICE OF STOCKHOLDERS’ MEETINGS	1
2.5	MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE	2
2.6	QUORUM	2
2.7	ADJOURNED MEETING; NOTICE	2
2.8	VOTING	2
2.9	WAIVER OF NOTICE	3
2.10	STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING	3
2.11	RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS	3
2.12	PROXIES	3
2.13	LIST OF STOCKHOLDERS ENTITLED TO VOTE	4
2.14	NATURE OF BUSINESS AT MEETINGS OF STOCKHOLDERS	4
2.15	NOMINATION OF DIRECTORS	7
2.16	STOCK LEDGER	9
2.17	CONDUCT OF MEETINGS	9
2.18	INSPECTORS OF ELECTION	10
ARTICLE III DIRECTORS		10
3.1	POWERS	10
3.2	NUMBER OF DIRECTORS	10
3.3	ELECTION; QUALIFICATION; TERM OF OFFICE OF DIRECTORS	10
3.4	ORGANIZATION	10
3.5	RESIGNATION AND VACANCIES	11
3.6	PLACE OF MEETINGS; MEETINGS BY TELEPHONE	11
3.7	REGULAR MEETINGS	11
3.8	SPECIAL MEETINGS; NOTICE	12
3.9	QUORUM	12
3.10	WAIVER OF NOTICE	12
3.11	BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING	12
3.12	FEES AND COMPENSATION OF DIRECTORS	12
3.13	REMOVAL OF DIRECTORS	13
ARTICLE IV COMMITTEES		13
4.1	COMMITTEES OF DIRECTORS	13
4.2	COMMITTEE MINUTES	13
4.3	MEETINGS AND ACTION OF COMMITTEES	13
ARTICLE V OFFICERS		14

i

5.1	OFFICERS	14
5.2	ELECTION OF OFFICERS	14
5.3	SUBORDINATE OFFICERS	14
5.4	REMOVAL AND RESIGNATION OF OFFICERS	14
5.5	VACANCIES IN OFFICES	15
5.6	CHAIRMAN OF THE BOARD	15
5.7	PRESIDENT	15
5.8	VICE PRESIDENTS	15
5.9	SECRETARY	15
5.10	TREASURER	16
5.11	ASSISTANT SECRETARY	16
5.12	ASSISTANT TREASURER	16
5.13	AUTHORITY AND DUTIES OF OFFICERS	17
ARTICLE VI INDEMNITY		17
6.1	POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION	17
6.2	POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION	17
6.3	AUTHORIZATION OF INDEMNIFICATION	18
6.4	GOOD FAITH DEFINED	18
6.5	INDEMNIFICATION BY A COURT	18
6.6	EXPENSES PAYABLE IN ADVANCE	19
6.7	NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES	19
6.8	INSURANCE	20
6.9	CERTAIN DEFINITIONS	20
6.10	SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES	20
6.11	LIMITATION ON INDEMNIFICATION	20
6.12	INDEMNIFICATION OF EMPLOYEES AND AGENTS	21
6.13	AMENDMENT	21
ARTICLE VII RECORDS AND REPORTS		21
7.1	MAINTENANCE AND INSPECTION OF RECORDS	21
7.2	INSPECTION BY DIRECTORS	21
7.3	REPRESENTATION OF VOTING SECURITIES OF OTHER ENTITIES	22
ARTICLE VIII GENERAL MATTERS		22
8.1	DISBURSEMENTS	22
8.2	EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS	22
8.3	STOCK CERTIFICATES	22
8.4	SPECIAL DESIGNATION ON CERTIFICATES	23
8.5	LOST CERTIFICATES	23
8.6	CONSTRUCTIONS; DEFINITIONS	23
8.7	DIVIDENDS	23
8.8	FISCAL YEAR	24
8.9	CORPORATE SEAL	24
8.10	TRANSFER OF STOCK	24
8.11	STOCK TRANSFER AGREEMENTS	24
8.12	REGISTERED STOCKHOLDERS	24
ARTICLE IX AMENDMENTS		25

ii

ARTICLE I

CORPORATE OFFICES

1.1 REGISTERED OFFICE

The registered office of the corporation shall be in the City of Wilmington, County of New Castle, State of Delaware. The name of the registered agent of the corporation at such location is Corporation Service Company.

1.2 OTHER OFFICES

The Board of Directors may at any time establish other offices at any place or places where the corporation is qualified to do business.

ARTICLE II

MEETINGS OF STOCKHOLDERS

2.1 PLACE OF MEETINGS

Meetings of stockholders shall be held at any place, if any, within or outside the State of Delaware, designated by the Board of Directors. In the absence of any such designation, stockholders’ meetings shall be held at the registered office of the corporation.

2.2 ANNUAL MEETING

The annual meeting of stockholders shall be held each year on a date and at a time designated by the Board of Directors. Subject to Sections 2.14 and 2.15 of these bylaws, at an annual meeting of stockholders directors shall be elected and any other proper business may be transacted.

2.3 SPECIAL MEETING

A special meeting of the stockholders may be called, at any time for any purpose or purposes, by the Board of Directors or by such person or persons as may be authorized by the certificate of incorporation or the bylaws. A special meeting of the stockholders may be called at any time for any purpose or purposes by the chairman of the Board of Directors or by a majority of the then current members of the Board of Directors.

2.4 NOTICE OF STOCKHOLDERS’ MEETINGS

Whenever stockholders are required or permitted to take any action at a meeting, a notice of the meeting shall be given in accordance with applicable law. Unless otherwise provided by applicable law, the certificate of incorporation, or these bylaws, notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to notice of and to vote at such meeting.

2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

Notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation. An affidavit of the secretary or an assistant secretary or of the transfer agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

2.6 QUORUM

The holders of a majority in voting power of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum is not present or represented at any meeting of stockholders, then the stockholders entitled to vote thereat, present in person or represented by proxy, by a majority of the votes cast, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.

2.7 ADJOURNED MEETING; NOTICE

Any meeting of stockholders may be adjourned from time to time to reconvene at the same or some other place. When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

2.8 VOTING

Unless otherwise required by the rules or regulations of any stock exchange applicable to the corporation, or applicable law or pursuant to any regulation applicable to the corporation or its securities, the certificate of incorporation or these bylaws, any question brought before any meeting of stockholders, other than the election of directors, shall be decided by the vote of the holders of a majority of the total number of votes of the corporation’s capital stock cast on the matter, voting as a single class. Unless otherwise provided in the certificate of incorporation, each stockholder represented at a meeting of stockholders shall be entitled to cast one (1) vote for each share of the capital stock entitled to vote on the matter held by such stockholder. Such votes may be cast in person or by proxy as provided in Section 2.12 of these bylaws. The Board of Directors, in its discretion, or the officer of the corporation presiding at a meeting of stockholders, in such officer’s discretion, may require that any votes cast at such meeting shall be cast by written ballot.

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2.9 WAIVER OF NOTICE

Whenever notice is required to be given under any provision of the General Corporation Law of the State of Delaware or of the certificate of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting, present in person or represented by proxy, shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of stockholders need be specified in any written waiver of notice unless so required by the certificate of incorporation or these bylaws.

2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

The stockholders of the corporation may not take any action by written consent without a meeting but must take any such action at a duly called annual or special meeting of stockholders.

2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS

In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (1) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting; and (2) in the case of any other action, shall not be more than sixty (60) days prior to such other action. If no record date is fixed: (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and (2) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

2.12 PROXIES

Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder as proxy, but no such proxy shall be voted upon

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after three (3) years from its date, unless such proxy provides for a longer period. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy, the following shall constitute a valid means by which a stockholder may grant such authority:

(i) A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished by the stockholder or such stockholder’s authorized officer, director, employee or agent signing such writing or causing such person’s signature to be affixed to such writing by any reasonable means, including, but not limited to, by facsimile signature.

(ii) A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such telegram, cablegram or other means of electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. If it is determined that such telegrams, cablegrams or other electronic transmissions are valid, the inspectors or, if there are no inspectors, such other persons making that determination shall specify the information on which they relied.

Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission authorizing another person or persons to act as proxy for a stockholder may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used; provided, however, that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE

The officer who has charge of the stock ledger shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting at least ten (10) days prior to the meeting (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of meeting or (ii) during ordinary business hours at the principal place of business of the corporation. The list of stockholders must also be open to examination at the meeting as required by applicable law.

2.14 NATURE OF BUSINESS AT MEETINGS OF STOCKHOLDERS

No business may be transacted at an annual meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise

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properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (c) otherwise properly brought before the annual meeting by any stockholder of the corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.14 and on the record date for the determination of stockholders entitled to notice of and to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 2.14.

In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the secretary of the corporation and the proposed business must constitute a proper matter for stockholder action.

To be timely, a stockholder’s notice to the secretary must be delivered to or mailed and received at the principal executive offices of the corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within twenty-five (25) days before or sixty (60) days after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

To be in proper written form, a stockholder’s notice to the secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the corporation, the language of the proposed amendment), (iii) the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made, (iv) the name and record address of such stockholder and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (v) the class or series and number of shares of capital stock of the corporation which are owned beneficially or of record by such stockholder and such beneficial owner, (vi) a description of any agreement, arrangement or understanding with respect to the proposal between or among such stockholder and/or such beneficial owner, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, and a (vii) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the stockholder’s notice by, or on behalf of, such stockholder and such beneficial owners, whether or not such instrument or right shall be subject to settlement in underlying shares of capital stock of the corporation, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or such beneficial owner, with respect to shares of stock of the corporation, (viii) a representation whether the stockholder or any

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beneficial owner intends or is part of a group which intends (1) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation’s outstanding capital stock required to approve or adopt the proposal and/or (2) otherwise to solicit proxies from stockholders in support of such proposal and (ix) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. The foregoing notice requirements of this Section 2.14 shall be deemed satisfied by a stockholder if the stockholder has notified the corporation of his, her or its intention to present a proposal at an annual meeting in compliance with applicable rules and regulations promulgated under the Exchange Act of 1934, as amended (the “Exchange Act”) and such stockholder’s proposal has been included in a proxy statement that has been prepared by the corporation to solicit proxies for such annual meeting.

Notwithstanding the foregoing provisions of this Section 2.14, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting of stockholders of the corporation to present proposed business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the corporation. For purposes of this Section 2.14, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 2.14; provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 2.14 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

For purposes of this Section 2.14, “public announcement” shall include disclosure in a press release reported by the Dow Jones News Service, Associated Press or other national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

Notwithstanding the foregoing provisions of this Section 2.14, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 2.14; provided however, that any references in these bylaws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to proposals as to any other business to be considered pursuant to this Section 2.14, and compliance with this Section 2.14 shall be the exclusive means for a stockholder to submit business (other than nominations which are governed by Section 2.15 and other than, as provided in the last

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sentence of the 4th paragraph of this Section 2.14, matters brought properly under and in compliance with the Exchange Act, as may be amended from time to time). Nothing in this Section 2.14 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the corporation’s proxy statement pursuant to applicable rules and regulations promulgated under the Exchange Act.

2.15 NOMINATION OF DIRECTORS

Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the corporation, except as may be otherwise provided in the certificate of incorporation with respect to the right of holders of preferred stock of the corporation to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.15 and on the record date for the determination of stockholders entitled to notice of and to vote at such meeting and (ii) who complies with the notice procedures set forth in this Section 2.15.

In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the secretary of the corporation.

To be timely, a stockholder’s notice to the secretary must be delivered to or mailed and received at the principal executive offices of the corporation (a) in the case of an annual meeting, not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within twenty-five (25) days before or sixty (60) days after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs; provided, however, that in the case of a special meeting of stockholders called for the purpose of electing directors, a stockholder’s notice to the secretary must be delivered to or mailed and received at the principal executive offices of the corporation not later than the close of business on the tenth (10th) day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs. In no event shall the public announcement of an adjournment or postponement of an annual or special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

To be in proper written form, a stockholder’s notice to the secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the corporation which are owned beneficially or of record by the person and (iv) any other

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information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made (i) the name and record address of such stockholder and the beneficial owner, (ii) the class or series and number of shares of capital stock of the corporation which are owned beneficially or of record by such stockholder and such beneficial owner, (iii) a description of any agreement, arrangement or understanding with respect to the nomination between or among such stockholder and/or such beneficial owner, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, and a (iv) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the stockholder’s notice by, or on behalf of, such stockholder and such beneficial owners, whether or not such instrument or right shall be subject to settlement in underlying shares of capital stock of the corporation, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or such beneficial owner, with respect to shares of stock of the corporation, (v) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice, (vi) a representation whether the stockholder or any beneficial owner intends or is part of a group which intends (1) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation’s outstanding capital stock required to elect the nominee and/or (2) otherwise to solicit proxies from stockholders in support of such nomination and (vii) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. The foregoing notice requirements of this Section 2.15 shall be deemed satisfied by a stockholder if the stockholder has notified the corporation of his, her or its intention to present a nomination at an annual meeting in compliance with applicable rules and regulations promulgated under the Exchange Act and such stockholder’s nomination has been included in a proxy statement that has been prepared by the corporation to solicit proxies for such annual meeting.

Notwithstanding anything in this Section 2.15 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the corporation is increased effective at the annual meeting and there is no public announcement by the Corporation naming the nominees for the additional directorships at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section 2.15 shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the corporation.

Notwithstanding the foregoing provisions of this Section 2.15, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the

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annual meeting of stockholders of the corporation to present a nomination, such nomination shall be disregarded notwithstanding that proxies in respect of such vote may have been received by the corporation. For purposes of this Section 2.15, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in this Section 2.15. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

For purposes of this Section 2.15, “public announcement” shall include disclosure in a press release reported by the Dow Jones News Service, Associated Press or other national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

2.16 STOCK LEDGER

The stock ledger of the corporation shall be the only evidence as to who are the stockholders entitled to examine the list required by Section 2.13 or to vote in person or by proxy at any meeting of stockholders.

2.17 CONDUCT OF MEETINGS

The Board of Directors may adopt by resolution such rules and regulations for the conduct of any meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (iii) rules and procedures for maintaining order at the meeting and the safety of those present; (iv) limitations on attendance at or participation in the meeting to stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (vi) limitations on the time allotted to questions or comments by participants.

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2.18 INSPECTORS OF ELECTION

In advance of any meeting of stockholders, the Board of Directors, by resolution, or the chairman or the president shall appoint one or more inspectors to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by applicable law, inspectors may be officers, employees or agents of the corporation. Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability. The inspector shall have the duties prescribed by law and shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by applicable law.

ARTICLE III

DIRECTORS

3.1 POWERS

Subject to the provisions of the General Corporation Law of the State of Delaware and any limitations in the certificate of incorporation, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors.

3.2 NUMBER OF DIRECTORS

The Board of Directors shall consist of no less than five (5) and no more than nine (9) members and, subject to the foregoing limitation, the exact number shall be determined by resolution of the Board of Directors.

No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

3.3 ELECTION; QUALIFICATION; TERM OF OFFICE OF DIRECTORS

Except as provided in these bylaws, directors shall be elected by a plurality of the votes cast at each annual meeting of stockholders and each director so elected shall hold office until the next annual meeting and until such director’s successor is duly elected and qualified, or until such director’s earlier death, resignation or removal. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws, wherein other qualifications for directors may be prescribed.

3.4 ORGANIZATION

At each meeting of the Board of Directors, the chairman of the board, if such officer be elected or, in the absence or nonexistence of the chairman of the board, the president of the corporation, shall act as chairman. In the absence or refusal of the president, a director chosen by a majority of the directors present shall act as chairman. The secretary or an assistant secretary of the corporation shall act as secretary at each meeting of the Board of Directors. In case the

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secretary shall be absent from any meeting of the Board of Directors, an assistant secretary shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the secretary and all the assistant secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting.

3.5 RESIGNATION AND VACANCIES

Any director may resign at any time upon written or electronic notice to the corporation. Such notice shall take effect at the time therein specified or, if no time is specified, immediately, and, unless specified in such notice, the acceptance of such resignation shall not be necessary to make it effective.

Unless otherwise provided in the certificate of incorporation or these bylaws:

(i) Vacancies resulting from death, resignation, removal or other cause, and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.

(ii) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.

If at any time, by reason of death, resignation, removal or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of the State of Delaware.

3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE

The Board of Directors may hold meetings, both regular and special, either within or outside the State of Delaware. Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

3.7 REGULAR MEETINGS

Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors.

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3.8 SPECIAL MEETINGS; NOTICE

Special meetings of the Board of Directors for any purpose or purposes may be called at any time by the chairman of the board, if there be one, the president or any two (2) directors.

Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight (48) hours before the date of the meeting, or by telephone, telegram or electronic means on twenty-four (24) hours’ notice or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. The notice need not specify the purpose or the place of the meeting, if the meeting is to be held at the principal executive office of the corporation.

3.9 QUORUM

At all meetings of the Board of Directors, a majority of the authorized number of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum is not present at any meeting of the Board of Directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

3.10 WAIVER OF NOTICE

Whenever notice is required to be given under any provision of the General Corporation Law of the State of Delaware or of the certificate of incorporation or these bylaws, a waiver thereof, either signed by the person entitled to notice or transmitted electronically by such person, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors or members of a committee of directors need be specified in any waiver of notice unless so required by the certificate of incorporation or these bylaws.

3.11 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmissions are filed with the minutes of proceedings of the board or committee in accordance with applicable law.

3.12 FEES AND COMPENSATION OF DIRECTORS

Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board of Directors shall have the authority to fix the compensation of directors.

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3.13 REMOVAL OF DIRECTORS

Unless otherwise restricted by applicable law, the certificate of incorporation or by these bylaws, any director or the entire Board of Directors may be removed from office at any time, with or without cause, only by the affirmative vote of the holders of at least a majority in voting power of the issued and outstanding capital stock of the corporation entitled to vote at an election of directors.

ARTICLE IV

COMMITTEES

4.1 COMMITTEES OF DIRECTORS

The Board of Directors may designate one or more committees, with each committee to consist of one or more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any committee, to the extent permitted by law and provided in the resolutions establishing such committee or in these bylaws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it.

4.2 COMMITTEE MINUTES

Each committee shall keep regular minutes of its meetings and report to the Board of Directors when required.

4.3 MEETINGS AND ACTION OF COMMITTEES

Meetings and actions of committees shall be governed by, and held and taken in accordance, with, the provisions of Article III of these bylaws, Section 3.5 (place of meetings and meetings by telephone), Section 3.7 (regular meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum), Section 3.10 (waiver of notice), and Section 3.11 (action without a meeting), with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board of Directors and its members; provided, however, that the time of regular meetings of committees may also be called by resolution of the Board of Directors and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board of Directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

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ARTICLE V

OFFICERS

5.1 OFFICERS

The officers of the corporation shall be a president, who may be designated in the alternative as the chief executive officer, one or more vice presidents, a secretary and a treasurer. The corporation may also have, at the discretion of the Board of Directors, a chairman of the board, one or more assistant secretaries, one or more assistant treasurers, and any such other officers as may be appointed in accordance with these bylaws unless otherwise prohibited by law or the certificate of incorporation. Any number of offices may be held by the same person unless otherwise prohibited by law, the certificate of incorporation or these bylaws.

5.2 ELECTION OF OFFICERS

The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 or 5.5 of these bylaws, shall be chosen by the Board of Directors, subject to the rights, if any, of an officer under any contract of employment. Such officers shall hold office for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and each officer of the corporation shall hold office until such officer’s successor is elected and qualified, or until such officer’s earlier death, resignation or removal.

5.3 SUBORDINATE OFFICERS

The Board of Directors may appoint, or empower the president to appoint, such other officers and agents as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board of Directors or the president, as applicable, may from time to time determine.

5.4 REMOVAL AND RESIGNATION OF OFFICERS

Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board of Directors at any regular or special meeting of the Board of Directors or, except in the case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors.

Any officer may resign at any time by giving a notice in writing or by electronic transmission to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

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5.5 VACANCIES IN OFFICES

Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors or by any officer upon whom the power to appoint such officer was conferred by the Board of Directors.

5.6 CHAIRMAN OF THE BOARD

The chairman of the board, if there be one, shall preside at all meetings of the Board of Directors. The chairman of the board shall also exercise such other powers and perform all the duties as may from time to time be assigned by the Board of Directors or as may be prescribed by these bylaws. During the absence or disability of the president, the chairman of the board shall exercise all the powers and discharge all the duties of the president as prescribed in Section 5.7 of these bylaws.

5.7 PRESIDENT

Subject to such supervisory powers, if any, as may be given by the Board of Directors to the chairman of the board, if there be such an officer, the president shall be the chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction, and control of the business and the officers of the corporation. The president shall preside at all meetings of the stockholders and, in the absence or nonexistence of a chairman of the board, at all meetings of the Board of Directors. The president shall also have such other powers and duties as may be assigned by the Board of Directors or these bylaws.

5.8 VICE PRESIDENTS

In the absence or disability of the president, the vice presidents, if any, in order of their rank as fixed by the Board of Directors or, if not ranked, a vice president designated by the Board of Directors, shall perform all the duties of the president, and when so acting shall have all the powers of and be subject to all the restrictions upon the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors, these bylaws, the president or the chairman of the board.

5.9 SECRETARY

The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the Board of Directors may direct, a book of minutes of all meetings and actions of directors, committees of directors, and stockholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors’ meetings or committee meetings, the number of shares present or represented at stockholders’ meetings, and the proceedings thereof.

The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation’s transfer agent or registrar, as determined by resolution of the Board of Directors, a share register, or a duplicate share register, showing the

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names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation.

The secretary or an assistant secretary shall attend all meetings of the Board of Directors. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors required to be given by law or by these bylaws. The secretary shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by these bylaws.

In the absence or disability of the secretary, and if there be no assistant secretary, the Board of Directors or the president may choose another officer to perform the duties of the secretary, who when so acting shall have all the powers of, and be subject to all the restrictions upon, the secretary.

5.10 TREASURER

The treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any director.

The treasurer shall deposit all money and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the Board of Directors. The treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the president and directors, whenever they request it, an account of all transactions as treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or these bylaws.

5.11 ASSISTANT SECRETARY

The assistant secretary, or, if there is more than one, the assistant secretaries in the order determined by the stockholders or Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of the secretary’s inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the Board of Directors or the stockholders may from time to time prescribe.

5.12 ASSISTANT TREASURER

The assistant treasurer, or, if there is more than one, the assistant treasurers, in the order determined by the stockholders or Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the treasurer or in the event of the treasurer’s inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the Board of Directors or the stockholders may from time to time prescribe.

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5.13 AUTHORITY AND DUTIES OF OFFICERS

In addition to the foregoing authority and duties, all officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the Board of Directors or these bylaws.

ARTICLE VI

INDEMNITY

6.1 POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION

Subject to Section 6.3 of these bylaws, the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that such person is or was a director or officer of the corporation, or is or was a director or officer of the corporation serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.

6.2 POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION

Subject to Section 6.3 of these bylaws, the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the corporation, or is or was a director or officer of the corporation serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation; except that no indemnification shall be made in respect of any claim, issue or

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matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

6.3 AUTHORIZATION OF INDEMNIFICATION

Any indemnification under this Article VI (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 6.1 or Section 6.2, of these bylaws as the case may be. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion or (iv) by the stockholders. Such determination shall be made, with respect to former directors and officers, by any person or persons having the authority to act on the matter on behalf of the corporation. To the extent, however, that a present or former director or officer of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith, without the necessity of authorization in the specific case.

6.4 GOOD FAITH DEFINED

For purposes of any determination under Section 6.3 of these bylaws, a person shall be deemed to have acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe such person’s conduct was unlawful, if such person’s action is based on the records or books of account of the corporation or other enterprise, or on information supplied to such person by the officers of the corporation or other enterprise in the course of their duties, or on the advice of legal counsel for the corporation or other enterprise or on information or records given or reports made to the corporation or other enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the corporation or other enterprise. The provisions of this Section 6.4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Section 6.1 or Section 6.2 of these bylaws, as the case may be.

6.5 INDEMNIFICATION BY A COURT

Notwithstanding any contrary determination in the specific case under Section 6.3 of these bylaws, and notwithstanding the absence of any determination thereunder, any director or

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officer may apply to the Court of Chancery of the State of Delaware or any other court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Section 6.1 or Section 6.2 of these bylaws. Any application to such court based on the absence of a determination by the corporation may only be brought after the expiration of thirty (30) days from the date the claim for indemnification was delivered to the corporation. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 6.1 or Section 6.2 of these bylaws, as the case may be. Neither a contrary determination in the specific case under Section 6.3 of these bylaws nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 6.5 shall be given to the corporation promptly upon the filing of such application. If successful, in whole or in part, the director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application to the fullest extent permitted by law.

6.6 EXPENSES PAYABLE IN ADVANCE

Expenses (including attorneys’ fees) incurred by a current or former director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this Article VI. If a claim for or advancement of expenses under this Article VI is not paid in full within thirty (30) days after a written claim therefor has been received by the corporation, such current or former director or officer seeking advancement may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law and such current or former director or officer shall also be entitled to receive pre-judgment interest on such unpaid amounts at then existing legal rate.

6.7 NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES

The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the certificate of incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, it being the policy of the corporation that indemnification of the persons specified in Section 6.1 and Section 6.2 of these bylaws shall be made to the fullest extent permitted by law. The provisions of these bylaws shall not be deemed to preclude the indemnification of any person who is not specified in Section 6.1 or Section 6.2 of these bylaws but whom the corporation has the power or obligation to indemnify under the provisions of the General Corporation Law of the State of Delaware, or otherwise.

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6.8 INSURANCE

The corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation, or is or was a director or officer of the corporation serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article VI.

6.9 CERTAIN DEFINITIONS

For purposes of this Article VI, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VI with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. The term “other enterprise” as used in this Article VI shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the corporation as a director, officer, employee or agent. For purposes of this Article VI, references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this Article VI.

6.10 SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES

The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VI shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.

6.11 LIMITATION ON INDEMNIFICATION

Notwithstanding anything contained in this Article VI to the contrary, except for proceedings to enforce rights to indemnification and advancement of expenses (which shall be governed by Sections 6.5 and 6.6 of these bylaws), the corporation shall not be obligated to

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indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) or advance expenses in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors.

6.12 INDEMNIFICATION OF EMPLOYEES AND AGENTS

The corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the corporation similar to those conferred in these bylaws to directors and officers of the corporation.

6.13 AMENDMENT

Any repeal or modification of the provisions of this Article VI shall not adversely affect any right or protection hereunder of any person entitled to rights hereunder in respect of any proceeding (regardless of when such proceeding is first threatened, commenced or completed) arising out of, or related to, any act or omission occurring prior to the time of such repeal or modification.

ARTICLE VII

RECORDS AND REPORTS

7.1 MAINTENANCE AND INSPECTION OF RECORDS

The corporation shall, either at its principal executive office or at such place or places as designated by the Board of Directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books, and other records.

To the extent required by the General Corporation Law of the State of Delaware, any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal place of business.

7.2 INSPECTION BY DIRECTORS

Any director shall have the right to examine the corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger, and

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the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.

7.3 REPRESENTATION OF VOTING SECURITIES OF OTHER ENTITIES

The chairman of the board, if such officer be elected, the president, any vice president, the treasurer, the secretary or assistant secretary of the corporation, or any other person authorized by the Board of Directors or the president or a vice president, is authorized to vote, represent, and exercise on behalf of the corporation all rights incident to any and all shares or other voting securities of any other corporation or other entity standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

ARTICLE VIII

GENERAL MATTERS

8.1 DISBURSEMENTS

From time to time, the Board of Directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments.

8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS

The Board of Directors, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement, to pledge its credit, or to render it liable for any purpose or for any amount.

8.3 STOCK CERTIFICATES

The shares of the corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Every holder of stock represented by certificates shall be entitled to have a certificate signed by or in the name of the corporation by the chairman of the Board of Directors, if any, or the president or vice president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary, of the corporation representing the number of shares owned by such holder in the corporation. Any of or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent, or registrar at the date of issue.

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8.4 SPECIAL DESIGNATION ON CERTIFICATES

If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of the State of the State of Delaware, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

8.5 LOST CERTIFICATES

Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and canceled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by the corporation, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the corporation a bond as the corporation may direct as sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate, or the issuance of such new certificate or uncertificated shares.

8.6 CONSTRUCTIONS; DEFINITIONS

Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the General Corporation Law of the State of Delaware shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes a corporation or other entity and a natural person.

8.7 DIVIDENDS

The Board of Directors, subject to any restrictions contained in the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock pursuant to the General Corporation Law of the State of Delaware. Dividends may be paid in cash, in property, or in shares of the corporation’s capital stock.

The Board of Directors may set apart out of any of the funds of the corporation available for dividends, a reserve or reserves for any proper purpose, and may abolish or modify any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies.

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8.8 FISCAL YEAR

The fiscal year of the corporation shall be fixed by resolution of the Board of Directors and may be changed by the Board of Directors.

8.9 CORPORATE SEAL

The corporation shall adopt a corporate seal, which may be altered at pleasure, and use the same by causing it or a facsimile thereof, to be impressed or affixed or in any other manner reproduced.

8.10 TRANSFER OF STOCK

Subject to any other requirement imposed by applicable law, transfers of stock represented by certificates shall be made on the books of the corporation only by the person named in the certificate therefor, properly endorsed for transfer, except where the officers of the corporation shall determine to waive such requirement for proper endorsement. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate, if such shares are to remain certificated, to the person entitled thereto, cancel the old certificate, and record the transaction in its books. Transfers of uncertificated shares of stock shall be effected in the manner prescribed by law. No transfer of stock shall be valid as against the corporation for any purpose until it shall have been entered in the stock records of the corporation by an entry showing from and to whom transferred.

8.11 STOCK TRANSFER AGREEMENTS

The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the General Corporation Law of the State of the State of Delaware.

8.12 REGISTERED STOCKHOLDERS

The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.

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ARTICLE IX

AMENDMENTS

Subject to the certificate of incorporation, these bylaws may be altered, amended or repealed, in whole or in part, or new bylaws may be adopted by the stockholders or by the Board of Directors. The fact that such power to amend the bylaws has been so conferred upon the Board of Directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws. All such amendments must be approved by either the holders of a majority in voting power of the capital stock entitled to vote thereon or by a majority of the entire Board of Directors then in office, except as otherwise provided in the certificate of incorporation.

As used in this Article IX and in these bylaws generally, the term “entire Board of Directors” means the total number of directors which the corporation would have if there were no vacancies.

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EX-4.1

Exhibit 4.1

BIOMARIN PHARMACEUTICAL INC.

a Delaware corporation

and

MELLON INVESTOR SERVICES LLC

a New Jersey limited liability company

as Rights Agent

AMENDED AND RESTATED

RIGHTS AGREEMENT

Dated as of February 27, 2009

TABLE OF CONTENTS

		Page
SECTION 1.	CERTAIN DEFINITIONS	2
SECTION 2.	APPOINTMENT OF RIGHTS AGENT	7
SECTION 3.	ISSUANCE OF RIGHT CERTIFICATES	7
3.1	Rights Represented by Share Certificates	7
3.2	Summary of Rights	8
3.3	New Certificates After Record Date	9
SECTION 4.	FORM OF RIGHT CERTIFICATES	10
SECTION 5.	COUNTERSIGNATURE AND REGISTRATION	11
SECTION 6.	TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES	12
SECTION 7.	EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS	13
7.1	Exercise of Rights	13
7.2	Purchase	13
7.3	Payment Procedures	13
7.4	Partial Exercise	14
7.5	Rights held by an Acquiring Person	14
7.6	Full Information Concerning Ownership	14
SECTION 8.	CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES	14
SECTION 9.	RESERVATION AND AVAILABILITY OF STOCK	15
SECTION 10.	PREFERRED SHARES RECORD DATE	16
SECTION 11.	ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS	17
11.1	Post-Execution Events	17
11.2	Dilutive Rights Offering	20
11.3	Distributions	20
11.4	Current Per Share Market Value	21
11.5	Insignificant Changes	22
11.6	Shares Other Than Preferred Shares	22
11.7	Rights Issued Prior to Adjustment	23
11.8	Effect of Adjustments	23
11.9	Adjustment in Number of Rights	23
11.10	Right Certificates Unchanged	24
11.11	Par Value Limitations	24
11.12	Deferred Issuance	24
11.13	Reduction in Purchase Price	24

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TABLE OF CONTENTS

(continued)

		Page
11.14	Company Not to Diminish Benefits of Rights	24
11.15	Adjustment of Rights Associated with Common Shares	25
11.16	Company Agreements	25
SECTION 12.	CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES	25
SECTION 13.	CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER	25
13.1	Certain Transactions	26
13.2	Actions Prior to Transactions	27
13.3	Principal Party	28
13.4	Approved Acquisitions	29
SECTION 14.	FRACTIONAL RIGHTS AND FRACTIONAL SHARES	29
14.1	Cash in Lieu of Fractional Rights	29
14.2	Cash in Lieu of Fractional Preferred Shares	30
14.3	Cash in Lieu of Fractional Common Shares	30
14.4	Waiver of Right to Receive Fractional Rights or Shares	30
SECTION 15.	RIGHTS OF ACTION	31
SECTION 16.	AGREEMENT OF RIGHT HOLDERS	31
SECTION 17.	RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER	32
SECTION 18.	CONCERNING THE RIGHTS AGENT	32
SECTION 19.	MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT	33
SECTION 20.	DUTIES OF RIGHTS AGENT	33
20.1	Legal Counsel	33
20.2	Certificates as to Facts or Matters	34
20.3	Standard of Care	34
20.4	Reliance on Agreement and Right Certificates	34
20.5	No Responsibility as to Certain Matters	34
20.6	Further Assurance by Company	34
20.7	Authorized Company Officers	35
20.8	Freedom to Trade in Company Securities	35
20.9	Reliance on Attorneys and Agents	35
20.10	Incomplete Certificate	35
20.11	Rights Holders List	35
20.12	Use of Funds	35
SECTION 21.	CHANGE OF RIGHTS AGENT	36

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TABLE OF CONTENTS

(continued)

		Page
SECTION 22.	ISSUANCE OF NEW RIGHT CERTIFICATES	36
SECTION 23.	REDEMPTION	37
23.1	Right to Redeem	37
23.2	Redemption Procedures	37
SECTION 24.	NOTICE OF CERTAIN EVENTS	38
SECTION 25.	NOTICES	39
SECTION 26.	SUPPLEMENTS AND AMENDMENTS; INTEGRATION	39
SECTION 27.	EXCHANGE	40
27.1	Exchange of Common Shares for Rights	40
27.2	Exchange Procedures	41
27.3	Insufficient Shares	41
SECTION 28.	SUCCESSORS	41
SECTION 29.	BENEFICIARIES OF THIS AGREEMENT	41
SECTION 30.	DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS	42
SECTION 31.	SEVERABILITY	42
SECTION 32.	GOVERNING LAW	42
SECTION 33.	COUNTERPARTS	42
SECTION 34.	DESCRIPTIVE HEADING	42
SECTION 35.	FORCE MAJEURE	42

iii

BioMarin Pharmaceutical Inc.

a Delaware corporation

and

Mellon Investor Services LLC

a New Jersey limited liability company

as Rights Agent

AMENDED AND RESTATED

RIGHTS AGREEMENT

Dated as of February 27, 2009

Amended and Restated Rights Agreement (the “Agreement”), dated as of February 27, 2009, between BioMarin Pharmaceutical Inc., a Delaware corporation (the “Company”) and Mellon Investor Services LLC, a New Jersey limited liability company as Rights Agent (the “Rights Agent”).

RECITALS

WHEREAS, on September 11, 2002 (the “Rights Dividend Declaration Date”), the Board of Directors authorized a dividend of one preferred share purchase right (a “Right”) for each Common Share (as defined in Section 1.7) outstanding at the close of business on September 23, 2002 (the “Record Date”) and has authorized and directed the issuance of one Right (subject to adjustment as provided herein) with respect to each Common Share that shall become outstanding between the Record Date and the earliest of the Distribution Date and the Expiration Date (as such terms are defined in Sections 3.1 and 7.1), each Right initially representing the right to purchase one one-hundredth (subject to adjustment) of a share of Series B Junior Participating Preferred Stock (the “Preferred Shares”) of the Company having the rights, powers and preferences set forth in a Certificate of Designation, Preferences and Rights filed with Secretary of State of Delaware on September 12, 2002; provided, however, that Rights may be issued with respect to Common Shares that shall become outstanding after the Distribution Date and prior to the Expiration Date in accordance with Section 22.

WHEREAS, on September 11, 2002, the Company and the Rights Agent entered in a Rights Agreement that set forth certain terms and conditions governing the Rights prior to the date hereof and pursuant to which the Company appointed the Rights Agent to act as rights agent;

WHEREAS, on August 7, 2003, in connection with the increase in the authorized common stock of the Company, the Company and the Rights Agent entered into an Amended and Restated Rights Agreement (the “Restated Rights Agreement”);

WHEREAS, the Company and the Rights Agent desire to amend the Restated Rights Agreement on the terms and conditions set forth herein;

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WHEREAS, this Agreement amends and restates in all respects the Restated Rights Agreement; and

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:

SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following terms have the meanings indicated:

1.1 “Acquiring Person” shall mean any Person (as such term is hereinafter defined) who or which, together with all Affiliates and Associates (as such terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 15% or more of the Common Shares of the Company then outstanding but shall not include an Exempt Person (as such term is hereinafter defined). Notwithstanding the first sentence of this Section 1.1,

(i) no Person shall become an “Acquiring Person” due to such Person becoming the Beneficial Owner of 15% or more of the Common Shares as a result of the issuance by the Company of Common Shares to such Person in consideration for the sale, contribution, conveyance, transfer, assignment or delivery of property, services or other assets by such Person to the Company,

(ii) no Person shall become an “Acquiring Person” as the result of an acquisition of Common Shares by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by such Person to 15% or more of the Common Shares of the Company then outstanding,

(iii) no Person shall become an “Acquiring Person” as the result of the acquisition of Common Shares from an individual who, on Rights Dividend Declaration Date, is the Beneficial Owner of 15% or more of the Common Shares if such Common Shares are received upon that individual’s death pursuant to that individual’s will or pursuant to a charitable trust created by that individual for estate planning purposes, and

(iv) no Person shall become an “Acquiring Person” as the result of the beneficial ownership of (A) Common Shares beneficially owned by such Person on the Rights Dividend Declaration Date (an “Existing Holder”) unless such Person becomes, after the Rights Dividend Declaration Date, the Beneficial Owner of an additional 1% or more of the Common Shares outstanding or (B) Common Shares beneficially owned as the result of stock dividends, subdivisions or similar transactions with respect to Common Shares;

provided, however, that if a Person shall become the Beneficial Owner of 15% or more of the Common Shares of the Company then outstanding by reason of (x) the issuance by the Company of Common Shares to such Person, (y) share purchases by the Company or (z) shares received upon an individual’s death as aforesaid and shall thereafter become the Beneficial Owner of one or more additional Common Shares of the Company

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(other than pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Shares in Common Shares or pursuant to a split or subdivision of the outstanding Common Shares), then such Person shall be deemed to be an “Acquiring Person” unless upon becoming the Beneficial Owner of such additional Common Shares such Person does not beneficially own 15% or more of the Common Shares then outstanding.

1.1.2 Notwithstanding the foregoing, if the Board of Directors determines in good faith that a Person who would otherwise be an “Acquiring Person,” as defined pursuant to the foregoing provisions of this Section 1.1, has become such inadvertently (including, without limitation, because (A) such Person was unaware that it beneficially owned a percentage of Common Shares that would otherwise cause such Person to be an “Acquiring Person”, (B) such Person was aware of the extent of its Beneficial Ownership of Common Shares but had no actual knowledge of the consequences of such Beneficial Ownership under this Agreement or (C) such Person became an “Acquiring Person” as the result of the formation of a group (as that term is used in the definition of “Person” in this Agreement) and such Person had no actual knowledge of the consequences of the formation of such a group under this Agreement), and without any intention of changing or influencing control of the Company, and such Person, if requested by the Board of Directors, divests itself as promptly as reasonably practicable of Beneficial Ownership of a sufficient number of Common Shares so that such Person would no longer be an Acquiring Person, as defined pursuant to the foregoing provisions of this Section 1.1, then such Person shall not be deemed to be or have become an “Acquiring Person” at any time for any purposes of this Agreement ; provided, however, that if such Person shall again become the Beneficial Owner of 15% or more of the Common Shares then outstanding, such Person shall be deemed to be an “Acquiring Person” subject to the exceptions set forth in this Section 1.1.

1.1.3 For all purposes of this Agreement, any calculation of the number of Common Shares outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding Common Shares of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as in effect on the date of this Agreement.

1.2 “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date of this Agreement.

1.3 A Person shall be deemed the “Beneficial Owner” of and shall be deemed to “beneficially own” any securities:

(i) which such Person or any of such Person’s Affiliates or Associates beneficially owns, directly or indirectly (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act, as in effect on the date of this Agreement, subject to Section 1.1.2);

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(ii) which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has (A) the right to acquire (whether such right is exercisable immediately, or only after the passage of time, compliance with regulatory requirements, fulfillment of a condition or otherwise) pursuant to any agreement, arrangement or understanding, whether or not in writing (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, (w) securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase or exchange, (x) securities which such Person has a right to acquire upon the exercise of Rights at any time prior to the time that any Person becomes an Acquiring Person, (y) securities issuable upon the exercise of Rights from and after the time that any Person becomes an Acquiring Person if such Rights were acquired by such Person or any of such Person’s Affiliates or Associates prior to the Distribution Date or pursuant to Section 3.1 or Section 22 (“Original Rights”) or pursuant to Section 11.9 or Section 11.15 with respect to an adjustment to Original Rights or (z) securities which such Person or any of such Person’s Affiliates or Associates may acquire, does or do acquire or may be deemed to have the right to acquire, pursuant to any merger or other acquisition agreement between the Company and such Person (or one or more of his Affiliates or Associates) if such agreement has been approved by the Board of Directors prior to such Person’s becoming an Acquiring Person; or (B) the right to vote pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security under this clause (B) if the agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or

(iii) which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) and with respect to which such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), whether or not in writing, for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy or consent as described in the proviso to Section 1.3(ii)(B)) or disposing of any securities of the Company; provided, however, that no Person who is an officer, director, trustee or employee of an Exempt Person shall be deemed, solely by reason of such Person’s status or authority as such, to be the “Beneficial Owner” of, to have “Beneficial Ownership” of or to “beneficially own” any securities that are “beneficially owned” (as defined in this Section 1.3), including, without limitation, in a fiduciary capacity, by an Exempt Person or by any other such officer, director, trustee or employee of an Exempt Person.

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1.4 “Board of Directors” shall mean the Board of Directors of the Company.

1.5 “Business Day” shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State of California, New Jersey or New York are authorized or obligated by law or executive order to close.

1.6 “Close of Business” on any given date shall mean 5:00 p.m., Pacific time, on such date; provided, however, that if such date is not a Business Day it shall mean 5:00 p.m., Pacific time, on the next succeeding Business Day.

1.7 “Common Shares” shall mean the shares of common stock, $.001 par value per share, of the Company; provided, however, that “Common Shares” when used with reference to any Person other than the Company shall mean the capital stock with the greatest voting power, or the equity securities or other equity interest having power to control or direct the management, of such other Person or, if such Person is a Subsidiary (as such term is hereinafter defined) of another Person, the Person or Persons which ultimately control such first-mentioned Person, and which has issued and outstanding such capital stock, equity securities or equity interest.

1.8 “Exempt Person” shall mean (A) the Company, (B) any Subsidiary of the Company, or (C) any employee benefit plan of the Company or of any Subsidiary of the Company or any entity or trustee holding shares of stock of the Company for or pursuant to the terms of any such plan, or for the purpose of funding other employee benefits for employees of the Company or any Subsidiary of the Company.

1.9 “Interested Stockholder” shall mean any Acquiring Person or any Affiliate or Associate of an Acquiring Person or any other Person in which any such Acquiring Person, Affiliate or Associate has an interest, or any other Person acting directly or indirectly on behalf of or in concert with any such Acquiring Person, Affiliate or Associate.

1.10 “Person” shall mean any individual, partnership, joint venture, limited liability company, firm, corporation, unincorporated association, trust, group (as such term is used in Rule 13d-5 of the General Rules and Regulations under the Exchange Act) or other entity, and shall include any successor (by merger or otherwise) of such entity.

1.11 “Shares Acquisition Date” shall mean the first date of public announcement (which, for purposes of this definition, shall include, without limitation, the filing of a report pursuant to Section 13(d) of the Exchange Act or pursuant to a comparable successor statute) by the Company or an Acquiring Person that an Acquiring Person has become such or that discloses information which reveals the existence of an Acquiring Person or any earlier date on which a majority of the Board of Directors shall become aware of the existence of an Acquiring Person.

1.12 “Subsidiary” of any Person shall mean any corporation or other entity of which a majority of the voting power of the voting equity securities or equity interests is owned, of record or beneficially, directly or indirectly, by such Person.

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1.13 “Transaction” shall mean (A) the Company’s consolidation with, or merger with or into, any other Person, as a result of which the Company is not the continuing or surviving corporation, (B) any Person’s consolidation with, or merger with or into the Company, as a result of which the Company is the continuing or surviving corporation and, in connection with such consolidation or merger, all or part of the outstanding Common Shares is changed into or exchanged for stock or other securities of the Company or any other Person or cash or any other property, or (C) the Company’s sale or other transfer (or one or more of its Subsidiaries’ sale or other transfer), in one transaction or a series of related transactions, of assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any Person or Persons (other than the Company or one or more wholly-owned Subsidiaries of the Company in one or more transactions each of which complies with Section 11.14).

1.14 “Transaction Person” with respect to a Transaction shall mean (A) any Person who (i) is or will become an Acquiring Person or a Principal Party (as such term is hereinafter defined) if the Transaction were to be consummated and (ii) directly or indirectly proposed or nominated a director of the Company which director is in office at the time of consideration of the Transaction, or (B) an Affiliate or Associate of such a Person.

1.15 A “Trigger Event” shall be deemed to have occurred upon any Person becoming an Acquiring Person.

The following terms shall have the meanings defined for such terms in the Sections set forth below:

Term	Section
Adjustment Shares	11.1.2
Agreement	Preamble
Beneficial Owner	1.3
Preferred Shares	Recitals
Common Stock Equivalent	11.1.3
Company	Preamble
Current Per Share Market Price	11.4.1
Current Value	11.1.3
Distribution Date	3.1
Equivalent Preferred Stock	11.2
Exchange Act	1.1.3
Exchange Consideration	27.1
Existing Holder	1.1(iv)
Expiration Date	7.1
Final Expiration Date	7.1
Injunction	11.1.2
Original Rights	1.3(ii)
Preferred Shares	Recitals
Principal Party	13.3
Purchase Price	4.1
Record Date	Recitals

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Redemption Date	7.1
Redemption Price	23.1
Restated Rights Agreement	Recitals
Right	Recitals
Right Certificate	3.1
Rights Agent	Preamble
Rights Dividend Declaration Date	Recitals
Securities Act	9
Security	11.4.1
Spread	11.1.3
Substitution Period	11.1.3
Summary of Rights	3.2
Trading Day	11.4.1
Trust	27.1
Trust Agreement	27.1

SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company has appointed the Rights Agent to act as agent for the Company in accordance with the terms and conditions hereof, and the Rights Agent has accepted such appointment. The Company may from time to time appoint such co-Rights Agents as it may deem necessary or desirable upon ten (10) days’ prior written notice to the Rights Agent. The Rights Agent shall have no duty to supervise, and shall in no event be liable for, the acts or omissions of any such co-Rights Agent. In the event the Company appoints one or more co-Rights Agents, the respective duties of the Rights Agent and any co-Rights Agent shall be as the Company shall determine. Contemporaneously with such appointment, if any, the Company shall notify the Rights Agent in writing of such appointment and of the respective duties of the Rights Agent and the co-Rights Agent.

SECTION 3. ISSUANCE OF RIGHT CERTIFICATES.

3.1 Rights Represented by Share Certificates. Until the earlier of (i) the tenth day after the Shares Acquisition Date (or if the tenth day after the Shares Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) or (ii) the tenth Business Day after the date of the commencement of, or first public announcement of the intent of any Person (other than an Exempt Person) to commence, a tender or exchange offer the consummation of which would result in any Person (other than an Exempt Person) becoming the Beneficial Owner of Common Shares aggregating 15% or more of the then outstanding Common Shares of the Company (the earlier of (i) and (ii) being herein referred to as the “Distribution Date”), (x) the Rights (unless earlier expired, redeemed or terminated) will be represented (subject to the provisions of Section 3.2) by the certificates for Common Shares registered in the names of the holders thereof (which certificates for Common Shares shall also be deemed to be Right Certificates) or, for Common Shares held in book-entry accounts through the direct registration service of the Company’s transfer agent, by such book-entry accounts (together with a direct registration transaction advice with respect to such shares), and not by separate certificates, and (y) the Rights (and the right to receive certificates therefor) will be transferable only in connection with the transfer of the underlying

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Common Shares. The preceding sentence notwithstanding, prior to the occurrence of a Distribution Date as a result of an event described in clause (ii) (or such later Distribution Date as the Board of Directors may select pursuant to this sentence), the Board of Directors may postpone, one or more times, the Distribution Date which would occur as a result of an event described in clause (ii) beyond the date set forth in such clause (ii). Nothing herein shall permit such a postponement of a Distribution Date after a Person becomes an Acquiring Person, except as a result of the operation of Section 1.1.1. As soon as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign and the Company will (i) send (or, if requested and provided with a list of holders of Common Shares, the Rights Agent will send), by first-class, postage-prepaid mail, to each record holder of Common Shares as of the close of business on the Distribution Date (other than any Acquiring Person or any Associate or Affiliate of an Acquiring Person), at the address of such holder shown on the records of the Company, one or more certificates for Rights, in substantially the form of Exhibit B hereto (a “Right Certificate”), representing one Right (subject to adjustment as provided herein) for each Common Share, or (ii) credit the book-entry account of such holder with such Rights and send a direct registration transaction advice with respect to such Rights to such holder. As of the Distribution Date, the Rights will be represented solely by such Right Certificates or such book-entry credits and related direct registration transaction advices. In the event the Company elects to distribute any Rights by crediting book-entry accounts, the provisions of this Agreement that reference Rights Certificates shall be interpreted to reflect that the Rights are credits to the book-entry accounts, that separate Rights Certificates are not issued with respect to some or all of the Rights, and that any legend required on a Rights Certificate may be placed on the direct registration transaction advice with respect to such Rights. The absence of specific language regarding book-entry accounts and credits in any provision of this Agreement shall not be interpreted to mean that the foregoing sentence is not applicable as appropriate to such provision. In the event that an adjustment in the number of Rights per Common Share has been made pursuant to Section 11.15 hereof, at the time of distribution of the Rights Certificates the Company shall make the necessary and appropriate rounding adjustments (in accordance with Section 14.1 hereof) so that Rights Certificates evidencing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights. The Company shall promptly notify the Rights Agent in writing upon the occurrence of the Distribution Date and, if such notification is given orally, the Company shall confirm same in writing on or prior to the Business Day next following. Until such notice is received by the Rights Agent, the Rights Agent may presume conclusively for all purposes that the Distribution Date has not occurred.

3.2 Summary of Rights. The Company has sent a copy of a Summary of Rights to Purchase Preferred Shares, in substantially the form attached hereto as Exhibit C (the “Summary of Rights”), by first-class, postage-prepaid mail, to each record holder of Common Shares as of the close of business on the Record Date at the address of such holder shown on the records of the Company. With respect to certificates for Common Shares outstanding as of the close of business on the Record Date, until the Distribution Date (or the earlier Expiration Date), the Rights associated with (i) the Common Shares represented by certificates will be represented by such certificates for Common Shares registered in the names of the holders thereof and (ii) the Common Shares held in book-entry accounts shall be held in book-entry accounts and represented by the related transaction advice, and in either

8

case the registered holders of the Common Shares shall also be registered holders of the associated Rights. Until the Distribution Date (or the earlier Expiration Date), the surrender for transfer of any certificate for Common Shares outstanding at the close of business on the Record Date, with or without a copy of the Summary of Rights, shall also constitute the transfer of the Rights associated with the Common Shares represented thereby.

3.3 New Certificates After Record Date. The Company shall cause certificates for Common Shares which become outstanding (whether upon issuance out of authorized but unissued Common Shares or transfer or exchange of outstanding Common Shares) after the Record Date, but prior to the earlier of the Distribution Date or the Expiration Date, to be impressed, printed, stamped, written or otherwise affixed with a legend in substantially the following form:

“This certificate also represents and entitles the holder hereof to certain rights (“Rights”) as set forth in an agreement between BioMarin Pharmaceutical Inc. (the “Company”) and Mellon Investor Services LLC as Rights Agent, dated as of September 11, 2002, as the same may be amended from time to time (the “Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of the Company. Under certain circumstances, as set forth in the Agreement, such Rights will be represented by separate certificates and will no longer be represented by this certificate. The Company will mail to the holder of this certificate a copy of the Agreement without charge after receipt of a written request therefor. As described in the Agreement, Rights which are owned by, transferred to or have been owned by Acquiring Persons or Associates or Affiliates thereof (as defined in the Agreement) shall become null and void and will no longer be transferable.”

Each book-entry account for such Common Shares that shall so become outstanding or shall be transferred or exchanged after the Record Date but prior to the earlier of the Distribution Date, the Redemption Date or the Expiration Date shall also be deemed to include the associated Rights, and the direct registration transaction advice with respect to such shall bear a legend in substantially the following form:

“Each security covered by this Advice entitles the holder hereof to certain rights (“Rights”) as set forth in an agreement between BioMarin Pharmaceutical Inc. (the “Company”) and Mellon Investor Services LLC as Rights Agent, dated as of September 11, 2002, as the same may be amended from time to time (the “Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of the Company. Under certain circumstances, as set forth in the Agreement, such Rights will be represented by separate certificates or be covered by separate

9

book-entry credits and will no longer be covered by this Advice. The Company will mail to the holder of this certificate a copy of the Agreement without charge after receipt of a written request therefor. As described in the Agreement, Rights which are owned by, transferred to or have been owned by Acquiring Persons or Associates or Affiliates thereof (as defined in the Agreement) shall become null and void and will no longer be transferable.”

With respect to such Common Shares described in this Section 3, until the Distribution Date (or the earlier Expiration Date), the Rights associated with the Common Shares represented by such certificates or held in such book-entry accounts shall be represented by such certificates or such book-entry accounts (together with the direct registration transaction advice with respect to such shares) alone, and the surrender for transfer of any such certificates, whether by transfer of physical certificates or book-entry transfer, except as otherwise provided herein, shall also constitute the transfer of the Rights associated with the Common Shares represented thereby. In the event that the Company purchases or acquires any Common Shares after the Record Date but prior to the Distribution Date, any Rights associated with such Common Shares shall be deemed cancelled and retired so that the Company shall not be entitled to exercise any Rights associated with the Common Shares which are no longer outstanding.

Notwithstanding this Section 3.3, the omission of a legend shall not affect the enforceability of any part of this Agreement or the rights of any holder of the Rights.

SECTION 4. FORM OF RIGHT CERTIFICATES.

4.1 The Right Certificates (and the forms of election to purchase shares, certification and assignment to be printed on the reverse thereof) shall be substantially in the form of Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate, which do not affect the rights, duties or responsibilities of the Rights Agent and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or trading system on which the Rights may from time to time be listed or quoted, or to conform to usage. Subject to the terms and conditions hereof, the Right Certificates, whenever issued, shall be dated as of the Record Date, and shall show the date of countersignature by the Rights Agent, and on their face shall entitle the holders thereof to purchase such number of two-hundredths of a Preferred Share as shall be set forth therein at the price per two-hundredth of a Preferred Share set forth therein (the “Purchase Price”), but the number of such two-hundredths of a Preferred Share and the Purchase Price shall be subject to adjustment as provided herein.

4.2 The Company shall cause any Rights Certificate issued pursuant to Sections 3.1 or Section 22 hereof that evidences Rights beneficially owned by any Person known to be (i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii)

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a transferee of any Person (or of any Associate or Affiliate of any Person) who becomes a transferee after such Person becomes an Acquiring Person, or (iii) a transferee of any Person (or of any Associate or Affiliate of any Person) who becomes a transferee prior to or concurrently with such Person becoming an Acquiring Person and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from such Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom such Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights, or (B) a transfer that the Board of Directors of the Company has determined is part of a plan, arrangement or understanding that has as a primary purpose or effect avoidance of Section 7.5 hereof, and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence, to contain (to the extent feasible) a legend in substantially the following form:

“The Rights evidenced by this Rights Certificate are or were beneficially owned by a Person who was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Amended and Restated Rights Agreement between the Company and the Rights Agent and its successors (the “Rights Agreement”)). Accordingly, this Rights Certificate and the Rights evidenced hereby may become null and void in the circumstances specified in Section 7.6 of the Rights Agreement.”

SECTION 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates shall be duly executed on behalf of the Company by its Chairman of the Board of Directors, Chief Executive Officer or any Vice President, either manually or by facsimile signature, and shall have affixed thereto the Company’s seal or a facsimile thereof which shall be attested by the Secretary, or any Assistant Secretary, of the Company, either manually or by facsimile signature. The Right Certificates shall be countersigned, either manually or by facsimile signature, by an authorized signatory of the Rights Agent, but it shall not be necessary for the same signatory to countersign all of the Right Certificates hereunder. No Right Certificate shall be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent, and issued and delivered by the Company with the same force and effect as though the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Agreement any such person was not such an officer.

Following the Distribution Date and receipt by the Rights Agent of notice to that effect and all relevant information referred to in Section 3.1, the Rights Agent will keep or cause to be kept, at its office, designated to the Company for such purposes, books for registration and transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights represented on its face by each of the Right Certificates, the certificate number of each of the Right Certificates and the date of each of the Right Certificates.

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SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. Subject to the provisions of Sections 7.6, 11.1.2 and Section 14, at any time after the Close of Business on the Distribution Date, and at or prior to the Close of Business on the Expiration Date, any Right Certificate or Right Certificates (other than Right Certificates representing Rights that have become void pursuant to Section 11.1.2 or that have been exchanged pursuant to Section 27) may be transferred, split up or combined or exchanged for another Right Certificate or Right Certificates, entitling the registered holder to purchase the same number of two-hundredths of a Preferred Share as the Right Certificate or Right Certificates surrendered then entitled such holder to purchase. Any registered holder desiring to transfer, split up or combine or exchange any Right Certificate shall make such request in writing delivered to the Rights Agent, and shall surrender, together with any required form of assignment and certificate duly completed, the Right Certificate or Right Certificates to be transferred, split up or combined or exchanged at the office of the Rights Agent designated for such purpose. The Rights Certificates are transferable only on the registry books of the Rights Agent. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Right Certificate or Right Certificates until the registered holder thereof shall have properly completed and duly signed the certification contained in the form of assignment on the reverse side of such Right Certificate or Right Certificates and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof of the Rights evidenced thereby as the Company and/or the Rights Agent shall reasonably request and paid a sum sufficient to cover any tax or charge that may be imposed in connection with any transfer, split up, combination or exchange of Rights Certificates as required by Section 9 hereof. Thereupon the Rights Agent shall countersign and deliver to the Person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested, registered in such name or names as may be designated by the surrendering registered holder. The Company may require payment from the holders of Right Certificates of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up or combination or exchange of such Right Certificates. The Rights Agent shall have no duty or obligation under this Section 6 unless and until it is satisfied that all such taxes and/or charges have been paid in full.

Subject to the provisions of Section 11.1.2, at any time after the Distribution Date and prior to the Expiration Date, upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security satisfactory to them, and, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will make and deliver a new Right Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.

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SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.

7.1 Exercise of Rights. Subject to Section 11.1.2 and except as otherwise provided herein, the registered holder of any Right Certificate may exercise the Rights represented thereby in whole or in part at any time after the Distribution Date upon surrender of the Right Certificate, with the form of election to purchase and certification on the reverse side thereof properly completed and duly executed, to the Rights Agent at the office of the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price for the total number of two-hundredths of a Preferred Share (or other securities, cash or other assets) as to which the Rights are exercised, at or prior to the time (the “Expiration Date”) that is the earliest of (i) the Close of Business on September 23, 2012 (the “Final Expiration Date”), (ii) the time at which the Rights are redeemed as provided in Section 23 (the “Redemption Date”), (iii) the closing of any merger or other acquisition transaction involving the Company pursuant to an agreement of the type described in Sections 1.3(ii)(A)(z) and 13.4, at which time the Rights are terminated, or (iv) the time at which the Rights are exchanged as provided in Section 27.

7.2 Purchase. The Purchase Price for each two-hundredth of a Preferred Share pursuant to the exercise of a Right shall be initially $35.00, shall be subject to adjustment from time to time as provided in Section 11, Section 13 and Section 26 and shall be payable in lawful money of the United States of America in accordance with Section 7.3.

7.3 Payment Procedures. Upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase and certification duly executed, accompanied by payment of the aggregate Purchase Price for the total number of two-hundredths of a Preferred Share to be purchased and an amount equal to any applicable transfer tax or charge required to be paid by the holder of such Right Certificate in accordance with Section 9, in cash or by certified check, cashier’s check, bank draft or money order payable to the order of the Company, the Rights Agent shall thereupon promptly (i)(A) requisition from any transfer agent of the Preferred Shares (or make available, if the Rights Agent is the transfer agent) certificates for the number of Preferred Shares to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the Company shall have elected to deposit the total number of Preferred Shares issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing interests in such number of two-hundredths of a Preferred Share as are to be purchased (in which case certificates for the Preferred Shares represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company hereby directs the depositary agent to comply with all such requests, (ii) when appropriate, requisition from the Company the amount of cash to be paid in lieu of the issuance of fractional shares in accordance with Section 14.1 or otherwise in accordance with Section 11.1.3, (iii) promptly after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder and (iv) when appropriate, after receipt, promptly deliver such cash to or upon the order of the registered holder of such Right Certificate. In the event that the Company is obligated to issue other securities of the Company, pay cash and/or distribute other property pursuant to Section 11.1.3, the Company will make all arrangements necessary so that such other securities, cash and/or other property are available for distribution by the Rights Agent, if and when necessary to comply with this Agreement.

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7.4 Partial Exercise. In case the registered holder of any Right Certificate shall exercise less than all the Rights represented thereby, a new Right Certificate representing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent and delivered to the registered holder of such Right Certificate or to his duly authorized assigns, subject to the provisions of Section 6 and Section 14.

7.5 Rights held by an Acquiring Person. Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of a Trigger Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of any Person (or of any Associate or Affiliate of any Person) who becomes a transferee after such Person becomes an Acquiring Person, or (iii) a transferee of any Person (or of any Associate or Affiliate of any Person) who becomes a transferee prior to or concurrently with such Person becoming an Acquiring Person and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from such Acquiring Person (or any Affiliate or Associate thereof) to holders of equity interests in such Acquiring Person (or any Affiliate or Associate thereof) or to any Person with whom such Acquiring Person (or any Affiliate or Associate thereof) has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer that the Board of Directors of the Company has determined is part of a plan, agreement, arrangement or understanding that has as a primary purpose or effect the avoidance of this Section 7.5, shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. The Company shall notify the Rights Agent when this Section 7.5 applies and shall use all reasonable efforts to ensure that the provisions of Sections 7.5 and 4.2 hereof are complied with, but neither the Company nor the Rights Agent shall have any liability to any holder of Rights Certificates or other Person as a result of the Company’s failure to make any determinations with respect to an Acquiring Person or any of its Affiliates, Associates or transferees hereunder.

7.6 Full Information Concerning Ownership. Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder of Rights upon the occurrence of any purported exercise as set forth in this Section 7 unless the certificate contained in the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise shall have been properly completed and duly signed by the registered holder thereof and the Company shall have been provided with such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company or the Rights Agent shall reasonably request.

SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right Certificates surrendered for the purpose of exercise, transfer, split-up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the

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Rights Agent, shall be cancelled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Right Certificates to the Company, or shall, at the written request of the Company, destroy such cancelled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.

SECTION 9. RESERVATION AND AVAILABILITY OF STOCK. The Company covenants and agrees that from and after the Distribution Date it will cause to be reserved and kept available out of its authorized and unissued Preferred Shares (and, following the occurrence of a Trigger Event, out of its authorized and unissued Common Shares or other securities) the number of Preferred Shares (and, following the occurrence of a Trigger Event, Common Shares and/or other securities) that will be sufficient to permit the exercise in full of all outstanding Rights.

So long as the Preferred Shares (and, following the occurrence of a Trigger Event, Common Shares and/or other securities) issuable upon the exercise of Rights may be listed on any stock exchange or traded in the over-the-counter market and quoted on an automated quotation system or such other system then in use, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares reserved for such issuance to be listed or admitted to trading on such exchange or quoted on an automated quotation system or such other system then in use upon official notice of issuance upon such exercise.

The Company covenants and agrees that it will take all such action as may be necessary to ensure that all Preferred Shares (and, following the occurrence of a Trigger Event, Common Shares and/or other securities) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable shares.

From and after such time as the Rights become exercisable, the Company shall use its best efforts, if then necessary to permit the issuance of Preferred Shares upon the exercise of Rights, to register and qualify such Preferred Shares under the Securities Act of 1933, as amended (the “Securities Act”) and any applicable state securities or “Blue Sky” laws (to the extent exemptions therefrom are not available), cause such registration statement and qualifications to become effective as soon as possible after such filing and keep such registration and qualifications effective until the earlier of the date as of which the Rights are no longer exercisable for such securities and the Expiration Date. The Company may temporarily suspend, for a period of time not to exceed ninety (90) days, the exercisability of the Rights in order to prepare and file a registration statement under the Securities Act and permit it to become effective. Upon any such suspension, the Company shall promptly notify the Rights Agent thereof and issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement (with prompt written notice thereof to the Rights Agent) at such time as the suspension is no longer in effect. In addition, if the Company shall determine that a registration statement is required

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following the Distribution Date, and a Trigger Event has not occurred, the Company may temporarily suspend (and shall give the Rights Agent prompt written notice thereof) the exercisability of Rights until such time as a registration statement has been declared effective. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall have been obtained and until a registration statement under the Securities Act (if required) shall have been declared effective.

The Company further covenants and agrees that it will pay when due and payable any and all taxes and charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any Preferred Shares (or Common Shares and/or other securities, as the case may be) upon the exercise of Rights. The Company shall not, however, be required to pay any tax or charge which may be payable in respect of any transfer or delivery of Right Certificates to a Person other than, or the issuance or delivery of certificates for the Preferred Shares (or Common Shares and/or other securities, as the case may be) in a name other than that of, the registered holder of the Right Certificate representing Rights surrendered for exercise or to issue or deliver any certificates for Preferred Shares (or Common Shares and/or other securities, as the case may be) in a name other than that of the registered holder upon the exercise of any Rights until any such tax or charge shall have been paid (any such tax or charge being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company’s satisfaction that no such tax or charge is due.

SECTION 10. PREFERRED SHARES RECORD DATE. Each person in whose name any certificate for Preferred Shares (or Common Shares and/or other securities, as the case may be) is issued (or in whose name a book-entry account for such securities is held) upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Preferred Shares (or Common Shares and/or other securities, as the case may be) represented thereby on, and such certificate (or, in the case of securities held in book-entry form, the related direct transaction registration advice) shall be dated, the date upon which the Right Certificate representing such Rights was duly surrendered (or the transfer of the book-entry accounts effected) and payment of the Purchase Price (and any applicable transfer taxes or charges) was made; provided, however, that if the date of such surrender (or transfer in book-entry form) and payment is a date upon which the Preferred Shares (or Common Shares and/or other securities, as the case may be) transfer books of the Company are closed, such person shall be deemed to have become the record holder of such shares (fractional or otherwise) on, and such certificate (or, in the case of securities held in book-entry form, the related direct registration transaction advice) shall be dated, the next succeeding Business Day on which the Preferred Shares (or Common Shares and/or other securities, as the case may be) transfer books of the Company are open. Prior to the exercise of the Rights represented thereby, the holder of a Right Certificate (or book entry-account) shall not be entitled to any rights of a holder of Preferred Shares for which the Rights shall be exercisable, including, without limitation, the right to vote or to receive dividends or other distributions, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein.

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SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS. The Purchase Price, the number of Preferred Shares or other securities or property purchasable upon exercise of each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.

11.1 Post-Execution Events.

11.1.1 Corporate Dividends, Reclassifications, Etc. In the event the Company shall at any time after the date of this Agreement (A) declare and pay a dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the outstanding Preferred Shares into a smaller number of Preferred Shares or (D) issue any shares of its stock in a reclassification of the Preferred Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11.1, the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of stock issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of shares of stock which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Shares transfer books of the Company were open, such person would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of stock of the Company issuable upon exercise of one Right. If an event occurs which would require an adjustment under both Sections 11.1.1 and 11.1.2, the adjustment provided for in this Section 11.1.1 shall be in addition to, and shall be made prior to, the adjustment required pursuant to, Section 11.1.2.

11.1.2 Acquiring Person Events; Trigger Events. Subject to Sections 23.1 and Section 27, in the event that a Trigger Event occurs, then, from and after the first occurrence of such event, each holder of a Right, except as provided below, shall, for a period of sixty (60) days after the later of a Trigger Event or the effective date of an appropriate registration statement filed under the Securities Act (provided, however, that if at any time prior to the expiration or termination of the Rights there shall be a temporary restraining order, an injunction or temporary suspension by the Board of Directors, or similar obstacle to exercise of the Rights (the “Injunction”) which prevents exercise of the Rights, a new 60-day period shall commence on the date the Injunction is removed) have a right to receive, upon exercise thereof at a price per Right equal to the then-current Purchase Price multiplied by the number of two-hundredths of a Preferred Share for which a Right is then exercisable (without giving effect to this Section 11.1.2), in accordance with the terms of this Agreement and in lieu of Preferred Shares, such number of Common Shares per Right as shall equal the result obtained by (x) multiplying the then-current Purchase Price by the number of two-hundredths of a Preferred Share for which a Right is then exercisable (without giving effect to this Section 11.1.2) and (y) dividing that product by 50% of the Current Per Share Market Price of the Common Shares (determined pursuant to Section 11.4) on the first of the date of the occurrence of, or the date of the first public announcement of, a Trigger Event (the “Adjustment Shares”); provided that the Purchase Price and the number of Adjustment Shares

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shall thereafter be subject to further adjustment as appropriate in accordance with Section 11.6. Notwithstanding the foregoing, upon the occurrence of a Trigger Event, any Rights that are or have been acquired or beneficially owned by (1) any Acquiring Person or any Associate or Affiliate thereof, (2) a transferee of any Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (3) a transferee of any Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom the Acquiring Person has any continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of Directors determines or has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect avoidance of this Section 11.1.2, and subsequent transferees, shall become null and void without any further action, and any holder (whether or not such holder is an Acquiring Person or an Associate or Affiliate of an Acquiring Person) of such Rights shall thereafter have no right to exercise such Rights under any provision of this Agreement or otherwise. The Company shall not enter into any transaction of the type described in this Section 11.1.2 if at the time of such transaction there are any rights, warrants, instruments or securities outstanding or any arrangements which, as a result of the consummation of such transaction, would eliminate or substantially diminish the benefits intended to be afforded by the Rights. From and after the Trigger Event, no Right Certificate shall be issued pursuant to Section 3 or Section 6 that represents Rights that are or have become void pursuant to the provisions of this paragraph, and any Right Certificate delivered to the Rights Agent that represents Rights that are or have become void pursuant to the provisions of this paragraph shall be cancelled.

The Company shall use all reasonable efforts to ensure that the provisions of this Section 11.1.2 are complied with, but shall have no liability to any holder of Right Certificates or other Person as a result of its failure to make any determinations with respect to any Acquiring Person or its Affiliates, Associates or transferees hereunder.

From and after the occurrence of an event specified in Section 13.1, any Rights that theretofore have not been exercised pursuant to this Section 11.1.2 shall thereafter be exercisable only in accordance with Section 13 and not pursuant to this Section 11.1.2.

11.1.3 Insufficient Shares. The Company may at its option substitute for a Common Share issuable upon the exercise of Rights in accordance with the foregoing Section 11.1.2 a number of Preferred Shares or fraction thereof such that the Current Per Share Market Price of one Preferred Share multiplied by such number or fraction is equal to the Current Per Share Market Price of one Common Share. In the event that upon the occurrence of one or more of the events listed in Section 11.1.2 above there shall not be sufficient Common Shares authorized but unissued to permit the exercise in full of the Rights in accordance with the foregoing Section 11.1.2, the Company shall take all such action as may be necessary to authorize additional Common Shares for issuance upon exercise of the Rights, provided, however, that if the Company determines that it is unable to cause the authorization of a sufficient number of additional Common Shares, then, in the event the

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Rights become exercisable, the Company, with respect to each Right and to the extent necessary and permitted by applicable law and any agreements or instruments in effect on the Rights Dividend Declaration Date to which it is a party, shall: (A) determine the excess of (1) the value of the Adjustment Shares issuable upon the exercise of a Right (the “Current Value”), over (2) the Purchase Price (such excess, the “Spread”) and (B) with respect to each Right (other than Rights which have become void pursuant to Section 11.1.2), make adequate provision to substitute for the Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) Preferred Shares or other equity securities of the Company (including, without limitation, shares, or fractions of shares, of preferred stock which, by virtue of having dividend, voting and liquidation rights substantially comparable to those of the Common Shares, the Board of Directors has deemed in good faith to have substantially the same value as Common Shares) (each such share of preferred stock or fractions of shares of preferred stock constituting a “Common Stock Equivalent”), (4) debt securities of the Company, (5) other assets or (6) any combination of the foregoing having an aggregate value equal to the Current Value, where such aggregate value has been determined by the Board of Directors based upon the advice of a nationally recognized investment banking firm selected in good faith by the Board of Directors; provided, however, that if the Company shall not have made adequate provision to deliver value pursuant to clause (B) above within thirty (30) days following the first occurrence of a Trigger Event, then the Company shall be obligated to deliver, to the extent necessary and permitted by applicable law and any agreements or instruments in effect on the Rights Dividend Declaration Date to which it is a party, upon the surrender for exercise of a Right and without requiring payment of the Purchase Price, Common Shares (to the extent available) and then, if necessary, such number or fractions of Preferred Shares (to the extent available) and then, if necessary, cash, which shares and/or cash have an aggregate value equal to the Spread. If the Board of Directors shall determine in good faith that it is unlikely that sufficient additional Common Shares could be authorized for issuance upon exercise in full of the Rights, the thirty (30) day period set forth above may be extended and re-extended to the extent necessary, but not more than ninety (90) days following the first occurrence of one of the events listed in Section 11.1.2 above, in order that the Company may seek stockholder approval for the authorization of such additional shares (such period as may be extended, the “Substitution Period”). To the extent that the Company determines that some action need be taken pursuant to the second and/or third sentences of this Section 11.1.3, the Company (x) shall provide that such action shall apply uniformly to all outstanding Rights, and (y) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek any authorization of additional shares and/or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company shall promptly notify the Rights Agent thereof and issue a public announcement stating that the exercisability of the Rights has been temporarily suspended as well as a public announcement (with prompt notice thereof to the Rights Agent) at such time as the suspension is no longer in effect. For purposes of this Section 11.1.3, the value of a Common Share shall be the Current Per Share Market Price (as determined pursuant to Section 11.4) on the date of the occurrence of a Trigger Event and the value of any “Common Stock Equivalent” shall be deemed to have the same value as the Common Shares on such date. The Board of Directors may, but shall not be required to, establish procedures to allocate the right to receive Common Shares upon the exercise of the Rights among holders of Rights pursuant to this Section 11.1.3.

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11.2 Dilutive Rights Offering. In case the Company shall fix a record date for the issuance of rights, options or warrants to all holders of Preferred Shares entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Preferred Shares (or securities having the same rights, privileges and preferences as the Preferred Shares (“Equivalent Preferred Stock”)) or securities convertible into Preferred Shares or Equivalent Preferred Stock at a price per Preferred Share or per share of Equivalent Preferred Stock (or having a conversion or exercise price per share, if a security convertible into or exercisable for Preferred Shares or Equivalent Preferred Stock) less than the Current Per Share Market Price of the Preferred Shares (as determined pursuant to Section 11.4) on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Preferred Shares and shares of Equivalent Preferred Stock outstanding on such record date plus the number of Preferred Shares and shares of Equivalent Preferred Stock which the aggregate offering price of the total number of Preferred Shares and/or shares of Equivalent Preferred Stock to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such Current Per Share Market Price and the denominator of which shall be the number of Preferred Shares and shares of Equivalent Preferred Stock outstanding on such record date plus the number of additional Preferred Shares and/or shares of Equivalent Preferred Stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible); provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of stock of the Company issuable upon exercise of one Right. In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive and binding on the Rights Agent and the holders of the Rights for all purposes. Preferred Shares and shares of Equivalent Preferred Stock owned by or held for the account of the Company or any Subsidiary of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such rights or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed.

11.3 Distributions. In case the Company shall fix a record date for the making of a distribution to all holders of the Preferred Shares (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness, cash, securities or assets or convertible securities, or subscription rights or warrants (excluding those referred to in Section 11.2), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Current Per Share Market Price of the Preferred Shares (as determined pursuant to Section 11.4) on such record date, less the fair market value (as determined in good faith by the Board of Directors, whose determination shall be described in a statement

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filed with the Rights Agent and shall be conclusive for all purposes) of the portion of the cash, assets, securities or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to one Preferred Share and the denominator of which shall be such Current Per Share Market Price of the Preferred Shares (as determined pursuant to Section 11.4); provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of stock of the Company to be issued upon exercise of one Right. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed.

11.4 Current Per Share Market Value.

11.4.1 General. For the purpose of any computation hereunder, the “Current Per Share Market Price” of any security (a “Security” for the purpose of this Section 11.4.1) on any date shall be deemed to be the average of the daily closing prices per share of such Security for the thirty (30) consecutive Trading Days (as such term is hereinafter defined) immediately prior to but not including such date; provided, however, that in the event that the Current Per Share Market Price of the Security is determined during any period following the announcement by the issuer of such Security of (i) a dividend or distribution on such Security payable in shares of such Security or securities convertible into such shares or (ii) any subdivision, combination or reclassification of such Security, and prior to the expiration of thirty (30) consecutive Trading Days after but not including the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the “Current Per Share Market Price” shall be appropriately adjusted to reflect the current market price per share equivalent of such Security. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange, The NASDAQ Stock Market, or, if the Security is not listed or admitted to trading on the New York Stock Exchange or The NASDAQ Stock Market, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Security is listed or admitted to trading, or, if the Security is not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by an automated quotation system or such other system then in use, or, if on any such date the Security is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Security selected by the Board of Directors. If on any such date no such market maker is making a market in the Security, the fair value of the Security on such date as determined in good faith by the Board of Directors shall be used. The term “Trading Day” shall mean a day on which the principal national securities exchange on which the Security is listed or admitted to trading is open for the transaction of business or, if the Security is not listed or admitted to trading on any national securities exchange, a Business Day. If the Security is not publicly held or not so listed or traded, or if on any such date the Security is not so quoted and no such market maker is making a market in the Security, “Current Per

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Share Market Price” shall mean the fair value per share as determined in good faith by the Board of Directors or, if at the time of such determination there is an Acquiring Person, by a nationally recognized investment banking firm selected by the Board of Directors, which shall have the duty to make such determination in a reasonable and objective manner, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.

11.4.2 Preferred Shares. Notwithstanding Section 11.4.1, for the purpose of any computation hereunder, the “Current Per Share Market Price” of the Preferred Shares shall be determined in the same manner as set forth above in Section 11.4.1 (other than the last sentence thereof). If the Current Per Share Market Price of the Preferred Shares cannot be determined in the manner described in Section 11.4.1, the “Current Per Share Market Price” of the Preferred Shares shall be conclusively deemed to be an amount equal to 200 (as such number may be appropriately adjusted for such events as stock splits, stock dividends and recapitalizations with respect to the Common Shares occurring after the date of this Agreement) multiplied by the Current Per Share Market Price of the Common Shares (as determined pursuant to Section 11.4.1). If neither the Common Shares nor the Preferred Shares are publicly held or so listed or traded, or if on any such date neither the Common Shares nor the Preferred Shares are so quoted and no such market maker is making a market in either the Common Shares or the Preferred Shares, “Current Per Share Market Price” of the Preferred Shares shall mean the fair value per share as determined in good faith by the Board of Directors, or, if at the time of such determination there is an Acquiring Person, by a nationally recognized investment banking firm selected by the Board of Directors, which shall have the duty to make such determination in a reasonable and objective manner, which determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. For purposes of this Agreement, the “Current Per Share Market Price” of one two-hundredth of a Preferred Share shall be equal to the “Current Per Share Market Price” of one Preferred Share divided by 200.

11.5 Insignificant Changes. No adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Purchase Price. Any adjustments which by reason of this Section 11.5 are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest one-millionth of a Preferred Share or the nearest one ten-thousandth of a Common Share or other share or security, as the case may be. Notwithstanding the first sentence of this Section 11.5, any adjustment required by this Section 11 shall be made no later than the earlier of (i) three years from the date of the transaction that mandate such adjustment, or (ii) the Expiration Date.

11.6 Shares Other Than Preferred Shares. If as a result of an adjustment made pursuant to Section 11.1, the holder of any Right thereafter exercised shall become entitled to receive any shares of stock of the Company other than Preferred Shares, thereafter the number of such other shares so receivable upon exercise of any Right shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Shares contained in Sections 11.1, 11.2, 11.3, 11.5, 11.8, 11.9 and 11.13, and the provisions of Section 7, Section 9, Section 10, Section 13 and Section 14 with respect to the Preferred Shares shall apply on like terms to any such other shares.

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11.7 Rights Issued Prior to Adjustment. All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall include the right to purchase, at the adjusted Purchase Price, the number of two-hundredths of a Preferred Share purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.

11.8 Effect of Adjustments. Unless the Company shall have exercised its election as provided in Section 11.9, upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11.2 and 11.3, each Right outstanding immediately prior to the making of such adjustment shall thereafter include the right to purchase, at the adjusted Purchase Price, that number of two-hundredths of a Preferred Share (calculated to the nearest one-hundred thousandth of a Preferred Share) obtained by (i) multiplying (x) the number of two-hundredths of a Preferred Share covered by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.

11.9 Adjustment in Number of Rights. The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in substitution for any adjustment in the number of two-hundredths of a Preferred Share issuable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of two-hundredths of a Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest two-hundredth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement and promptly notify the Rights Agent in writing of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Right Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11.9, the Company may, as promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date Right Certificates representing, subject to Section 14, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Right Certificates representing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed and delivered by the Company, and countersigned and delivered by the Rights Agent in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement.

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11.10 Right Certificates Unchanged. Irrespective of any adjustment or change in the Purchase Price or the number of two-hundredths of a Preferred Share issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price per share and the number of two-hundredths of a Preferred Share which were expressed in the initial Right Certificates issued hereunder.

11.11 Par Value Limitations. Before taking any action that would cause an adjustment reducing the Purchase Price below one two-hundredth of the then par value, if any, of the Preferred Shares or other shares of stock issuable upon exercise of the Rights, the Company shall take any action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Preferred Shares or other such shares at such adjusted Purchase Price.

11.12 Deferred Issuance. In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer (and shall promptly notify the Rights Agent in writing of any such election) until the occurrence of such event the issuance to the holder of any Right exercised after such record date of that number of Preferred Shares and shares of other stock or securities of the Company, if any, issuable upon such exercise over and above the Preferred Shares and shares of other stock or other securities, assets or cash of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument representing such holder’s right to receive such additional shares upon the occurrence of the event requiring such adjustment.

11.13 Reduction in Purchase Price. Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that it in its sole discretion shall determine to be advisable in order that any consolidation or subdivision of the Preferred Shares, issuance wholly for cash of any of the Preferred Shares at less than the current market price, issuance wholly for cash of Preferred Shares or securities which by their terms are convertible into or exchangeable for Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or issuance of rights, options or warrants referred to above in this Section 11, hereafter made by the Company to holders of its Preferred Shares, shall not be taxable to such stockholders.

11.14 Company Not to Diminish Benefits of Rights. The Company covenants and agrees that after the earlier of the Shares Acquisition Date or Distribution Date it will not, except as permitted by Section 23, Section 26 or Section 27, take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights.

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11.15 Adjustment of Rights Associated with Common Shares. Notwithstanding anything contained in this Agreement to the contrary, in the event that the Company shall at any time after the Rights Dividend Declaration Date and prior to the Distribution Date (i) declare or pay any dividend on the outstanding Common Shares payable in Common Shares, (ii) effect a subdivision or consolidation of the outstanding Common Shares (by reclassification or otherwise than by the payment of dividends payable in Common Shares), or (iii) combine the outstanding Common Shares into a greater or lesser number of Common Shares, then in any such case, the number of Rights associated with each Common Share then outstanding, or issued or delivered thereafter but prior to the Distribution Date or in accordance with Section 22 shall be proportionately adjusted so that the number of Rights thereafter associated with each Common Share following any such event shall equal the result obtained by multiplying the number of Rights associated with each Common Share immediately prior to such event by a fraction, the numerator of which shall be the total number of Common Shares outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of Common Shares outstanding immediately following the occurrence of such event. The adjustment provided for in this Section 11.15 shall be made successively whenever a dividend referred to in this Section 11.15 is declared or paid or a subdivision, combination or consolidation referred to in this Section 11.15 is effected.

11.16 Company Agreements. The Company covenants and agrees that it shall not, at any time after the Distribution Date engage in a Transaction if (x) at the time of or immediately after such Transaction there are any rights, warrants or other instruments or securities outstanding or agreements in effect that would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (y) prior to, simultaneously with or immediately after such Transaction, the stockholders of the Person who constitutes, or would constitute, the “Principal Party” for purposes of Section 13.1 hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates.

SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES. Whenever an adjustment is made or any event affecting the Rights or their exercisability (including without limitation an event which causes Rights to become null and void) occurs as provided in Section 11 or Section 13, the Company shall (a) promptly prepare a certificate setting forth such adjustment or describing such event, and a brief, reasonably detailed statement of the facts and computations accounting for such adjustment, (b) promptly file with the Rights Agent and with each transfer agent for the Common Shares or the Preferred Shares a copy of such certificate and (c) mail a brief summary thereof to each holder of a Right Certificate in accordance with Section 25. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment or statement therein contained and shall have no duty or liability with respect to and shall not be deemed to have knowledge of any such adjustment or any such event unless and until it shall have received such certificate.

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SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER.

13.1 Certain Transactions. In the event that, from and after the first occurrence of a Trigger Event, directly or indirectly, the Company consummates a Transaction, then, and in each such case, proper provision shall be made so that

(i) each holder of a Right (other than Rights which have become void pursuant to Section 11.1.2) shall thereafter have the right to receive, upon the exercise thereof at a price per Right equal to the then-current Purchase Price multiplied by the number of two-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the first occurrence of a Trigger Event (as subsequently adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12), in accordance with the terms of this Agreement and in lieu of Preferred Shares or Common Shares, such number of validly authorized and issued, fully paid, non-assessable and freely tradable Common Shares of the Principal Party (as such term is hereinafter defined) not subject to any liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result obtained by (x) multiplying the then-current Purchase Price by the number of two-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the first occurrence of a Trigger Event (as subsequently adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12) and (y) dividing that product by 50% of the then Current Per Share Market Price of the Common Shares of such Principal Party (determined pursuant to Section 11.4) on the date of consummation of the Transaction; provided, that the price per Right so payable and the number of Common Shares of such Principal Party so receivable upon exercise of a Right shall thereafter be subject to further adjustment as appropriate in accordance with Section 11.6 to reflect any events covered thereby occurring in respect of the Common Shares of such Principal Party after the occurrence of such consolidation, merger, sale or transfer;

(ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or transfer, all the obligations and duties of the Company pursuant to this Agreement;

(iii) the term “Company” shall thereafter be deemed to refer to such Principal Party; and

(iv) such Principal Party shall take such steps (including, but not limited to, the authorization and reservation of a sufficient number of its Common Shares in accordance with Section 9) in connection with such consummation as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its Common Shares thereafter deliverable upon the exercise of the Rights; provided that, upon the subsequent occurrence of any consolidation, merger, sale or transfer of assets or other extraordinary transaction in respect of such Principal Party, each holder of a Right shall thereupon be entitled to receive, upon exercise of a Right and payment of the Purchase Price as provided in this Section 13.1, such cash, shares, rights, warrants and other property which such holder would have been entitled to receive had such holder, at the time of such transaction, owned the Common Shares of the Principal Party receivable upon the exercise of a Right pursuant to this Section 13.1, and such Principal Party shall take such steps (including, but not limited to, reservation of shares of stock) as may be necessary to permit the subsequent exercise of the Rights in accordance with the terms hereof for such cash, shares, rights, warrants and other property.

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13.2 Actions Prior to Transactions. The Company shall not consummate any Transaction unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement confirming that the requirements of this Sections 13.1 and 13.2 shall promptly be performed in accordance with their terms and that such Transaction shall not result in a default by the Principal Party under this Agreement as the same shall have been assumed by the Principal Party pursuant to this Section 13.1 and Section 13.2 and providing that, as soon as practicable after executing such agreement pursuant to this Section 13, the Principal Party, at its own expense, shall

(i) prepare and file a registration statement under the Securities Act, if necessary, with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, use its best efforts to cause such registration statement to become effective as soon as practicable after such filing and use its best efforts to cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the Expiration Date and similarly comply with applicable state securities laws;

(ii) use its best efforts, if the Common Shares of the Principal Party shall be listed or admitted to trading on the New York Stock Exchange, The NASDAQ Stock Market or on another national securities exchange, to list or admit to trading (or continue the listing of) the Rights and the securities purchasable upon exercise of the Rights on the New York Stock Exchange, The NASDAQ Stock Market or such securities exchange, or, if the Common Shares of the Principal Party shall not be listed or admitted to trading on the New York Stock Exchange, The NASDAQ Stock Market or a national securities exchange, to cause the Rights and the securities receivable upon exercise of the Rights to be authorized for quotation on an automated quotation system or such other system then in use;

(iii) deliver to holders of the Rights historical financial statements for the Principal Party which comply in all respects with the requirements for registration on Form 10 (or any successor form) under the Exchange Act; and

(iv) obtain waivers of any rights of first refusal or preemptive rights in respect of the Common Shares of the Principal Party subject to purchase upon exercise of outstanding Rights.

In case the Principal Party has provision in any of its authorized securities or in its charter or bylaws or other instrument governing its corporate affairs, which provision would have the effect of (i) causing such Principal Party to issue (other than to holders of Rights pursuant to this Section 13), in connection with, or as a consequence of, the consummation of a transaction referred to in this Section 13, Common Shares or Common Stock Equivalents of such Principal Party at less than the then-current market price per share thereof (determined pursuant to Section 11.4) or securities exercisable for, or convertible into,

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Common Shares or Common Stock Equivalents of such Principal Party at less than such then-current market price (other than to holders of Rights pursuant to this Section 13), or (ii) providing for any special payment, taxes or similar provision in connection with the issuance of the Common Shares of such Principal Party pursuant to the provisions of this Section 13, then, in such event, the Company hereby agrees with each holder of Rights that it shall not consummate any such transaction unless prior thereto the Company and such Principal Party shall have duly executed and delivered to the Rights Agent a supplemental agreement providing that the provision in question of such Principal Party shall have been cancelled, waived or amended, or that the authorized securities shall be redeemed, so that the applicable provision will have no effect in connection with, or as a consequence of, the consummation of the proposed transaction.

The Company covenants and agrees that it shall not, at any time after the Trigger Event, enter into any Transaction if (i) at the time of or immediately after such Transaction there are any rights, warrants or other instruments or securities outstanding or agreements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights, (ii) prior to, simultaneously with or immediately after such Transaction, the stockholders of the Person who constitutes, or would constitute, the Principal Party for purposes of Section 13.3 shall have received a distribution of Rights previously owned by such Person or any of its Affiliates or Associates or (iii) the form or nature of organization of the Principal Party would preclude or limit the exercisability of the Rights. The provisions of this Section 13 shall similarly apply to successive Transactions.

13.3 Principal Party. “Principal Party” shall mean:

(i) in the case of any Transaction: (i) the Person that is the issuer of the securities into which the Common Shares are converted in such Transaction, or, if there is more than one such issuer, the issuer the Common Shares of which have the greatest aggregate market value of shares outstanding, or (ii) if no securities are so issued, (x) the Person that is the other party to the merger, if such Person survives said merger, or, if there is more than one such Person, the Person the Common Shares of which have the greatest aggregate market value of shares outstanding or (y) if the Person that is the other party to the merger does not survive the merger, the Person that does survive the merger (including the Company if it survives) or (z) the Person resulting from the consolidation; and

(ii) in the case of any Transaction, the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions, or, if each Person that is a party to such Transaction receives the same portion of the assets or earning power so transferred or if the Person receiving the greatest portion of the assets or earning power cannot be determined, whichever of such Persons is the issuer of Common Shares having the greatest aggregate market value of shares outstanding; provided, however, that in any Transaction, if the Common Shares of such Person are not at such time or have not been continuously over the preceding twelve month period registered under Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect Subsidiary of another Person the Common Shares of which are and have been so registered, the term

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“Principal Party” shall refer to such other Person, or (2) if such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Shares of all of which are and have been so registered, the term “Principal Party” shall refer to whichever of such Persons is the issuer of Common Shares having the greatest aggregate market value of shares outstanding, or (3) if such Person is owned, directly or indirectly, by a joint venture formed by two or more Persons that are not owned, directly or indirectly, by the same Person, the rules set forth in clauses (1) and (2) above shall apply to each of the owners having an interest in the venture as if the Person owned by the joint venture was a Subsidiary of both or all of such joint venturers, and the Principal Party in each such case shall bear the obligations set forth in this Section 13 in the same ratio as its interest in such Person bears to the total of such interests.

13.4 Approved Acquisitions. Notwithstanding anything contained herein to the contrary, in the event of any merger or other acquisition transaction involving the Company pursuant to a merger or other acquisition agreement between the Company and any Person (or one or more of such Person’s Affiliates or Associates) which agreement has been approved by the Board of Directors prior to any Person becoming an Acquiring Person, this Agreement and the rights of holders of Rights hereunder shall be terminated in accordance with Section 7.1.

SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.

14.1 Cash in Lieu of Fractional Rights. The Company shall not be required to issue fractions of Rights or to distribute Right Certificates which represent fractional Rights (except prior to the Distribution Date in accordance with Section 11.15). In lieu of such fractional Rights, there shall be paid to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable an amount in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 14.1, the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange, The NASDAQ Stock Market, or, if the Rights are not listed or admitted to trading on the New York Stock Exchange or The NASDAQ Stock Market, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading, or, if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by an automated quotation system or such other system then in use, or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors. If on any such date no such market maker is making a market in the Rights, the current market value of the Rights on such date shall be the fair value of the Rights as determined in good faith by the Board of Directors, or, if at the time of such determination there is an Acquiring Person, by a nationally recognized investment banking firm selected by the Board of Directors, which shall have the duty to make such determination in a reasonable and objective manner, which determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.

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14.2 Cash in Lieu of Fractional Preferred Shares. The Company shall not be required to issue fractions of Preferred Shares (other than fractions which are integral multiples of one two-hundredth of a Preferred Share) upon exercise or exchange of the Rights or to distribute certificates which represent fractional Preferred Shares (other than fractions which are integral multiples of one two-hundredth of a Preferred Share). Interests in fractions of Preferred Shares in integral multiples of one two-hundredth of a Preferred Share may, at the election of the Company, be represented by depositary receipts, pursuant to an appropriate agreement between the Company and a depositary selected by it; provided, that such agreement shall provide that the holders of such depositary receipts shall have all the rights, privileges and preferences to which they are entitled as beneficial owners of the Preferred Shares represented by such depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples of one two-hundredth of a Preferred Share, the Company shall pay to the registered holders of Right Certificates at the time such Rights are exercised or exchanged as herein provided an amount in cash equal to the same fraction of the Current Per Share Market Price of one Preferred Share (as determined in accordance with Section 11.4) for the Trading Day immediately prior to the date of such exercise or exchange.

14.3 Cash in Lieu of Fractional Common Shares. The Company shall not be required to issue fractions of Common Shares or to distribute certificates which represent fractional Common Shares upon the exercise or exchange of Rights. In lieu of such fractional Common Shares, the Company shall pay to the registered holders of the Right Certificates with regard to which such fractional Common Shares would otherwise be issuable an amount in cash equal to the same fraction of the current market value of a whole Common Share (as determined in accordance with Section 14.1) for the Trading Day immediately prior to the date of such exercise or exchange.

14.4 Waiver of Right to Receive Fractional Rights or Shares. The holder of a Right by the acceptance of the Rights expressly waives his right to receive any fractional Rights or any fractional shares upon exercise or exchange of a Right, except as permitted by this Section 14. Whenever a payment for fractional Rights or fractional shares is to be made by the Rights Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting forth in reasonable detail the facts related to such payments and the prices and/or formulas utilized in calculating such payments, and (ii) provide sufficient monies to the Rights Agent in the form of fully collected funds to make such payments. The Rights Agent shall be fully protected in relying upon such a certificate and shall have no duty with respect to, and shall not be deemed to have knowledge of any payment for fractional Rights or fractional shares under any Section of this Agreement relating to the payment of fractional Rights or fractional shares unless and until the Rights Agent shall have received such a certificate and sufficient monies.

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SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this Agreement, except the rights of action given to the Rights Agent hereunder, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the Common Shares); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Shares), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the Common Shares), may, in his own behalf and for his own benefit, enforce this Agreement, and may institute and maintain any suit, action or proceeding against the Company to enforce this Agreement, or otherwise enforce or act in respect of his right to exercise the Rights represented by such Right Certificate in the manner provided in such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and shall be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of, the obligations of any Person (including, without limitation, the Company) subject to this Agreement.

Notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, judgment, decree or ruling (whether interlocutory or final) issued by a court or by a governmental, regulatory, self-regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided, however, that the Company must use all reasonable efforts to have any such injunction, order, judgment, decree or ruling lifted or otherwise overturned as soon as possible.

SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by accepting the same consents and agrees with the Company and the Rights Agent and with every other holder of a Right that:

(i) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Common Shares;

(ii) as of and after the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the office of the Rights Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer with all required certifications properly completed and duly executed; and

(iii) the Company and the Rights Agent may deem and treat the Person in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Shares certificate) is registered as the absolute owner thereof and of the Rights represented hereby (notwithstanding any notations of ownership or writing on the Right Certificates or the associated Common Shares certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary.

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SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder, as such, of any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the Preferred Shares or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 24), or to receive dividends or subscription rights, or otherwise, until the Right or Rights represented by such Right Certificate shall have been exercised in accordance with the provisions hereof.

SECTION 18. CONCERNING THE RIGHTS AGENT. The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder in accordance with the fee schedule attached hereto as Exhibit D and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the preparation, execution, delivery, administration and amendment of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost, or expense (including, without limitation, the reasonable fees and expenses of legal counsel), incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent (which gross negligence, bad faith, or willful misconduct must be determined by a final, nonappealable judgment of a court of competent jurisdiction) for any action taken, suffered, or omitted by the Rights Agent in connection with the acceptance, administration, exercise and performance of its duties under this Agreement, including the costs and expenses of defending against any claim of liability arising therefrom, directly or indirectly. The costs and expenses incurred by the Rights Agent in enforcing this right of indemnification shall be paid by the Company unless it is finally determined by a court of competent jurisdiction that the Rights Agent is not entitled to indemnification due to the Rights Agent’s gross negligence, bad faith or willful misconduct, in which event, the Rights Agent shall repay all such costs and expenses. The indemnity and compensation provided herein shall survive the termination of this Agreement, the termination and the expiration of the Rights and the resignation or removal of the Rights Agent. Anything to the contrary notwithstanding, in no event shall the Rights Agent be liable for special, punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damage. Any liability of the Rights Agent under this Agreement will be limited to the amount of fees paid by the Company to the Rights Agent pursuant to this Agreement. The provisions of this Section 18 and Section 20 below shall survive the termination of this Agreement, the exercise or expiration of the Rights and the resignation, replacement or removal of the Rights Agent.

The Rights Agent may conclusively rely upon and shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its acceptance and administration of this Agreement and the exercise and performance of its duties hereunder, in reliance upon any Right Certificate or certificate for the Preferred

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Shares or the Common Shares or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, instruction, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons.

SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT. Any Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the shareholder services business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.

In case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.

SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes to perform only the duties and obligations expressly imposed by this Agreement (and no implied duties or obligations) upon the terms and conditions set forth in this Section 20, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound.

20.1 Legal Counsel. The Rights Agent may consult with legal counsel selected by it (who may be legal counsel for the Company or an employee of the Rights Agent), and the written advice or opinion of such counsel shall be full and complete authorization and protection to the Rights Agent, and the Rights Agent shall incur no liability for or in respect of any action taken, suffered, or omitted by it in accordance with such advice or opinion.

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20.2 Certificates as to Facts or Matters. Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including without limitation, the identity of an Acquiring Person and the determination of the current per share market price of any security) be proved or established by the Company prior to taking, suffering or omitting to take any action hereunder, such fact or matter (unless other representation in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, any Vice President, the Treasurer, the Secretary or any Assistant Treasurer or Assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full and complete authorization and protection to the Rights Agent, and the Rights Agent shall incur no liability for or in respect of any action taken, suffered or omitted by it under the provisions of this Agreement in reliance upon such certificate.

20.3 Standard of Care. The Rights Agent shall be liable hereunder to the Company or any other Person only for its own gross negligence, bad faith or willful misconduct as finally determined by a court of competent jurisdiction.

20.4 Reliance on Agreement and Right Certificates. The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except as to its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only.

20.5 No Responsibility as to Certain Matters. The Rights Agent shall not have any liability for, nor be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor shall it be liable or responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be liable or responsible for any change in the exercisability of the Rights (including the Rights becoming null and void pursuant to Section 11.1.2) or any adjustment required under the provisions of Section 3, Section 11, Section 13, Section 23 or Section 27 or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights represented by Right Certificates after actual notice of any such change or adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Preferred Shares or other securities to be issued pursuant to this Agreement or any Right Certificate or as to whether any Preferred Shares will, when so issued, be validly authorized and issued, fully paid and nonassessable.

20.6 Further Assurance by Company. The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.

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20.7 Authorized Company Officers. The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, any Vice President, the Treasurer, the Secretary or any Assistant Treasurer or Assistant Secretary of the Company, and to apply to such officers for advice or instructions in connection with its duties under this Agreement, and such advice or instructions shall be full authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for or the respect of any action taken or suffered to be taken or omitted by it in accordance with the advice or instructions of any such officer or for any delay in acting while waiting for those instructions. The Rights Agent shall be fully authorized and protected in relying upon the most recent instructions received by any such officer.

20.8 Freedom to Trade in Company Securities. The Rights Agent and any stockholder, Affiliate, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent (or any such stockholder, affiliate, director, officer or employee) from acting in any other capacity for the Company or for any other Person.

20.9 Reliance on Attorneys and Agents. The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself (through its directors, officers and employees) or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company, any holder of Rights or any other Person resulting from any such act, omission, default, neglect or misconduct, absent gross negligence or willful misconduct, in the selection and continued employment thereof (which gross negligence or willful misconduct must be determined by a final judgment of a court of competent jurisdiction).

20.10 Incomplete Certificate. If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate contained in the form of assignment or the form of election to purchase set forth on the reverse thereof, as the case may be, has not been properly completed to certify the holder is not an Acquiring Person (or an Affiliate or Associate thereof), the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the Company.

20.11 Rights Holders List. At any time and from time to time after the Distribution Date, upon the written request of the Company, the Rights Agent shall promptly deliver to the Company a list, as of the most recent practicable date (or as of such earlier date as may be specified by the Company), of the holders of record of Rights.

20.12 Use of Funds. No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if it believes that repayment of such funds or adequate indemnification against such risk or liability is not assured to it.

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SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days’ notice in writing mailed to the Company and to each transfer agent of the Common Shares and/or Preferred Shares known to the Rights Agent, as applicable, by registered or certified mail. Following the Distribution Date, the Company shall promptly notify the holders of the Right Certificates by first-class mail of any such resignation. The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days’ notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Shares and/or Preferred Shares, as applicable, by registered or certified mail, and to the holders of the Right Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the resigning, removed, or incapacitated Rights Agent shall remit to the Company, or to any successor Rights Agent designated by the Company, all books, records, funds, certificates or other documents or instruments of any kind then in its possession which were acquired by such resigning, removed or incapacitated Rights Agent in connection with its services as Rights Agent hereunder, and shall thereafter be discharged from all duties and obligations hereunder. Following notice of such removal, resignation or incapacity, the Company shall appoint a successor to such Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a Person, or an Affiliate of such a Person, organized and doing business under the laws of the United States or any state of the United States in good standing, having an office in the State of New York, the State of California or the State of Delaware, which is authorized under such laws to exercise stockholder services and is subject to supervision or examination by Federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Shares and/or Preferred Shares, as applicable, and, following the Distribution Date, mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.

SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates representing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or other securities or property purchasable under the Right

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Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of Common Shares following the Distribution Date and prior to the Expiration Date, the Company shall, with respect to Common Shares so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, granted or awarded, or upon exercise, conversion or exchange of securities (other than Common Shares) hereinafter issued by the Company, in each case existing prior to the Distribution Date, issue Right Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no such Right Certificate shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Right Certificate would be issued, and (ii) no such Right Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.

SECTION 23. REDEMPTION.

23.1 Right to Redeem. The Company may, at its option, at any time prior to the earlier of the Trigger Event and the Expiration Date, redeem all but not less than all of the then outstanding Rights at a redemption price of $.001 per Right, appropriately adjusted to reflect any stock split, stock dividend, recapitalization or similar transaction occurring after the Rights Dividend Declaration Date (such redemption price being hereinafter referred to as the “Redemption Price”), and the Company may, at its option, pay the Redemption Price in Common Shares (based on the “Current Per Share Market Price” determined pursuant to Section 11.4 of the Common Shares at the time of redemption), cash or any other form of consideration deemed appropriate by the Board of Directors. The redemption of the Rights by the Company may be made effective at such time, on such basis and subject to such conditions as the Board of Directors in its sole discretion may establish. In addition, the Company may, at its option, at any time after a Trigger Event and after the expiration of any period during which the holder of Rights may exercise the rights under Section 11.1.2 but prior to any Transaction, redeem all but not less than all of the then outstanding Rights at the Redemption Price (i) in connection with any Transaction in which all holders of Common Shares are treated alike and not involving (other than as a holder of Common Shares being treated like all other such holders) an Interested Stockholder or a Transaction Person or (ii)(A) if and for so long as the Acquiring Person is not thereafter the Beneficial Owner of 15% or more of the then outstanding Common Shares; provided, however, that if such Acquiring Person is an Existing Holder, such Acquiring Person may thereafter be the Beneficial Owner of the number of Common Shares such Acquiring Person beneficially owned as of the date of this Agreement, and (B) at the time of redemption no other Person is an Acquiring Person.

23.2 Redemption Procedures. Immediately upon the action of the Board of Directors ordering the redemption of the Rights (or at such later time as the Board of Directors may establish for the effectiveness of such redemption), and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so held. The Company shall promptly give the Rights Agent prompt written notice thereof and public notice of such redemption; provided, however, that the failure to give, or any defect in, any such notice shall not affect the validity of such redemption. The Company shall promptly

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give, or through written direction to the Rights Agent cause the Rights Agent to give, notice of such redemption to the holders of the then outstanding Rights by mailing such notice to all such holders at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Common Shares. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption shall state the method by which the payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23 or in Section 27, and other than in connection with the purchase, acquisition or redemption of Common Shares prior to the Distribution Date.

SECTION 24. NOTICE OF CERTAIN EVENTS. In case the Company shall propose at any time after the earlier of the Shares Acquisition Date and the Distribution Date (a) to pay any dividend payable in stock of any class to the holders of Preferred Shares or to make any other distribution to the holders of Preferred Shares, or (b) to offer to the holders of Preferred Shares rights or warrants to subscribe for or to purchase any additional Preferred Shares or shares of stock of any class or any other securities, rights or options, or (c) to effect any reclassification of its Preferred Shares (other than a reclassification involving only the subdivision of outstanding Preferred Shares), or (d) to effect any consolidation or merger into or with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person (other than pursuant to a merger or other acquisition agreement of the type described in Section 1.3(ii)(A)(z)), or (e) to effect the liquidation, dissolution or winding up of the Company, or (f) to declare or pay any dividend on the Common Shares payable in Common Shares or to effect a subdivision, combination or consolidation of the Common Shares (by reclassification or otherwise than by payment of dividends in Common Shares), then, in each such case, the Company shall give to the Rights Agent and to each holder of a Right Certificate, in accordance with Section 25, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the Preferred Shares and/or Common Shares, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (a) or (b) above at least ten (10) days prior to the record date for determining holders of the Preferred Shares for purposes of such action, and in the case of any such other action, at least ten (10) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Preferred Shares and/or Common Shares, whichever shall be the earlier.

In case any event set forth in Section 11.1.2 or Section 13 shall occur, then, in any such case, (i) the Company shall as soon as practicable thereafter give to the Rights Agent and to each holder of a Right Certificate, in accordance with Section 25, a notice of the occurrence of such event, which notice shall describe the event and the consequences of the event to holders of Rights under Section 11.1.2 and Section 13, and (ii) all references in this Section 24 to Preferred Shares shall be deemed thereafter to refer to Common Shares and/or, if appropriate, other securities.

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Notwithstanding anything in this Agreement to the contrary, prior to the Distribution Date a filing by the Company with the Securities and Exchange Commission shall constitute sufficient notice to the holders of securities of the Company, including the Rights, for purposes of this Agreement and no other notice need be given.

SECTION 25. NOTICES. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows:

BioMarin Pharmaceutical Inc.

105 Digital Drive

Novato, California 94949

Attention: Secretary

Subject to the provisions of Section 21 and Section 24, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows:

Mellon Investor Services LLC

235 Montgomery Street, 23rd Floor

San Francisco, California 94104

Attention: Lisa Brenten

with a copy to:

Mellon Investor Services LLC

Newport Office Center VII

480 Washington Boulevard

Jersey City, New Jersey 07310

Attention: General Counsel

Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate (or, prior to the Distribution Date, to the holder of any certificate representing Common Shares) shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company.

SECTION 26. SUPPLEMENTS AND AMENDMENTS; INTEGRATION. For so long as the Rights are redeemable, the Company may in its sole and absolute discretion, and the Rights Agent shall, if the Company so directs, supplement or amend any provision of this Agreement in any respect without the approval of any holders of Rights or Common Shares. From and after the time that the Rights are no longer redeemable, the Company may, and the Rights Agent shall, if the Company so directs, from time to time supplement or amend this Agreement without the approval of any holders of Rights (i) to cure any ambiguity or to correct or supplement any provision contained herein which may be defective or inconsistent

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with any other provisions herein, or (ii) to make any other changes or provisions in regard to matters or questions arising hereunder which the Company may deem necessary or desirable, including but not limited to extending the Final Expiration Date; provided, however, that no such supplement or amendment shall adversely affect the interests of the holders of Rights as such (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no such supplement or amendment may cause the Rights again to become redeemable or cause this Agreement again to become amendable other than in accordance with this sentence; provided further, that the right of the Board of Directors to extend the Distribution Date shall not require any amendment or supplement hereunder. Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 26, and provided such supplement or amendment does not change, modify or increase the Rights Agent’s duties, liabilities or obligations hereunder or change, modify or decrease the Rights Agents rights and immunities hereunder, the Rights Agent shall execute such supplement or amendment; provided, however, that a supplement or amendment complying with this sentence shall become effective immediately upon execution by the Company, whether or not also executed by the Rights Agent., provided that the Company shall promptly notify the Rights Agent of any such supplement or amendment (including using commercially reasonable efforts to notify the Rights Agent of such supplement or amendment prior to the execution thereof by the Company) and provide the Rights Agent with a copy of such supplement or amendment. Without limiting the foregoing, at any time prior to such time as any Person becomes an Acquiring Person, the Company and the Rights Agent may amend this Agreement to lower the thresholds set forth in Sections 1.1 and 3.1 to not less than the greater of (i) any percentage greater than the largest percentage of the outstanding Common Shares then known by the Company to be beneficially owned by any Person (other than an Exempt Person) and (ii) 10%. This Agreement constitutes the entire understanding and agreement among the parties hereto with respect to the subject matter hereof, and there are no agreements, understandings, restrictions, representations or warranties among the parties hereto with respect to the subject matter hereof other than those set forth herein or herein provided for.

SECTION 27. EXCHANGE.

27.1 Exchange of Common Shares for Rights. The Company may, at its option, at any time after the occurrence of a Trigger Event, exchange Common Shares for all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 11.1.2) at an exchange ratio of one Common Share per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the Rights Dividend Declaration Date (such amount per Right being hereinafter referred to as the “Exchange Consideration”). Notwithstanding the foregoing, the Company shall not be empowered to effect such exchange at any time after any Acquiring Person shall have become the Beneficial Owner of 50% or more of the Common Shares then outstanding. From and after the occurrence of an event specified in Section 13.1, any Rights that theretofore have not been exchanged pursuant to this Section 27.1 shall thereafter be exercisable only in accordance with Section 13 and may not be exchanged pursuant to this Section 27.1. The exchange of the Rights by the Company may be made effective at such time, on such basis and with such conditions as the Board of Directors in its sole discretion may establish. Prior to effecting an exchange pursuant to this Section 27.1, the

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Board of Directors may direct the Company to enter into a Trust Agreement in such form and with such terms as the Board of Directors shall then approve (the “Trust Agreement”). If the Board of Directors so directs, the Company shall enter into the Trust Agreement and shall issue to the trust created by such agreement (the “Trust”) all of the Common Shares issuable pursuant to the exchange, and all stockholders entitled to receive shares pursuant to the exchange shall be entitled to receive such shares (and any dividends or distributions made thereon after the date on which such shares are deposited in the Trust) only from the Trust and solely upon compliance with the relevant terms and provisions of the Trust Agreement.

27.2 Exchange Procedures. Immediately upon the action of the Board of Directors ordering the exchange for any Rights pursuant to Section 27.1 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive the Exchange Consideration. The Company shall promptly give written notice to the Rights Agent and public notice of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company promptly shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange shall state the method by which the exchange of the Common Shares for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than the Rights that have become null and void pursuant to the provisions of Section 11.1.2) held by each holder of Rights.

27.3 Insufficient Shares. The Company may at its option substitute, and, in the event that there shall not be sufficient Common Shares issued but not outstanding or authorized but unissued to permit an exchange of Rights for Common Shares as contemplated in accordance with this Section 27, the Company shall substitute to the extent of such insufficiency, for each Common Share that would otherwise be issuable upon exchange of a Right, a number of Preferred Shares or fraction thereof (or Equivalent Preferred Stock, as such term is defined in Section 11.2) such that the Current Per Share Market Price (determined pursuant to Section 11.4) of one Preferred Share (or equivalent preferred share) multiplied by such number or fraction is equal to the Current Per Share Market Price of one Common Share (determined pursuant to Section 11.4) as of the date of such exchange.

SECTION 28. SUCCESSORS. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.

SECTION 29. BENEFICIARIES OF THIS AGREEMENT. Nothing in this Agreement shall be construed to give to any Person or corporation other than the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares).

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SECTION 30. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS. The Board of Directors shall have the exclusive power and authority to administer this Agreement and to exercise the rights and powers specifically granted to the Board of Directors or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Agreement and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including, without limitation, a determination to redeem or not redeem the Rights or amend this Agreement). All such actions, calculations, interpretations and determinations that are done or made by the Board of Directors in good faith shall be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights, as such, and all other parties. The Rights Agent is entitled to always assume the Board of Directors acted in good faith and shall be fully protected and incur no liability in reliance thereon.

SECTION 31. SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided, however, that if such excluded provision shall affect the rights, immunities, duties or obligations of the Rights Agent, the Rights Agent shall be entitled to resign immediately.

SECTION 32. GOVERNING LAW. This Agreement and each Right and each Rights Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State; provided, however, that all provisions regarding the rights, duties and obligations of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State.

SECTION 33. COUNTERPARTS. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

SECTION 34. DESCRIPTIVE HEADING. Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

SECTION 35. FORCE MAJEURE. Notwithstanding anything to the contrary contained herein, the Rights Agent shall not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or malfunctions of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war or civil unrest.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written.

BioMarin Pharmaceutical Inc.
By:	/s/ G. Eric Davis
Name:	G. Eric Davis
Title:	Vice President, General Counsel
Mellon Investor Services LLC
By:	/s/ Asa Drew
Name:	Asa Drew
Title:	Assistant Vice President

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Exhibit A

Form of

Certificate of Amendment

of

Certificate Of Designation, Preferences And Rights

of

Series B Junior Participating Preferred Stock

of

BioMarin Pharmaceutical Inc.

The undersigned officer of BioMarin Pharmaceutical Inc. (the “Corporation”), a corporation organized and existing under the laws of the State of Delaware hereby certifies as follows:

FIRST: On June 12, 2003, pursuant to the authority conferred upon the Board of Directors of the Corporation (the “Board of Directors”) by Article IV of the Amended and Restated Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”), the Board of Directors adopted resolutions setting forth an amendment to the Corporation’s Certificate of Designation, Preferences and Rights of Series B Junior Participating Preferred Stock (the “Series B Junior Certificate of Designation”) and declaring said amendment to be advisable.

SECOND: No shares of Series B Junior Participating Preferred Stock have been issued.

THIRD: The Series B Junior Certificate of Designation is hereby amended and restated as follows:

SERIES B JUNIOR PARTICIPATING PREFERRED STOCK

Section 1. Designation and Amount. The shares of such series shall be designated as Series B Junior Participating Preferred Stock, $.001 par value per share (the “Series B Preferred Stock”), and the number of shares constituting the Series B Preferred Stock shall be seven-hundred fifty thousand (750,000). Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series B Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series B Preferred Stock.

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Section 2. Dividends and Distributions.

(A) Subject to the prior and superior rights of the holders of any shares of any class or series of stock of this Corporation ranking prior and superior to the Series B Preferred Stock with respect to dividends, the holders of shares of Series B Preferred Stock, in preference to the holders of Common Stock, par value $.001 per share (the “Common Stock”), of the Corporation, and of any other stock ranking junior to the Series B Preferred Stock, shall be entitled to receive, when, as and if authorized by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the fifteenth day of January, April, July and October of each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series B Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $0.01 or (b) an amount, subject to the provision for adjustment hereinafter set forth, equal to 200 times the aggregate per share amount of all cash dividends, and 200 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series B Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B) The Corporation shall declare a dividend or distribution on the Series B Preferred Stock as provided in paragraph (A) of this Section 2 immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $0.01 per share on the Series B Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin

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to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series B Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series B Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series B Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.

(D) In determining whether a distribution (other than upon voluntary or involuntary liquidation), by dividend, redemption or other acquisition of shares of stock of the Corporation or otherwise, is permitted under the DGCL, amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of holders of the Series B Preferred Stock shall not be added to the Corporation’s total liabilities.

Section 3. Voting Rights. The holders of shares of Series B Preferred Stock shall have the following voting rights:

(A) Subject to the provision for adjustment hereinafter set forth, each share of Series B Preferred Stock shall entitle the holder thereof to 200 votes on all matters submitted to a vote of the holders of Common Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

(B) Except as otherwise provided herein, in the Certificate of Incorporation, or in any other Certificate of Designation, Preferences and Rights creating a series of Preferred Stock or any similar stock, the holders of shares of Series B Preferred Stock and the holders of shares of Common Stock and any other shares of stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

(C) Except as set forth herein, or as otherwise provided by law, holders of Series B Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

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Section 4. Certain Restrictions.

(A) Whenever quarterly dividends or other dividends or distributions payable on the Series B Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series B Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

(i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock;

(ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, except dividends paid ratably on the Series B Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (both as to dividends and upon dissolution, liquidation or winding up) to the Series B Preferred Stock; or

(iv) redeem or purchase or otherwise acquire for consideration any shares of Series B Preferred Stock, or any shares of stock ranking on a parity with the Series B Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

Section 5. Reacquired Shares. Any shares of Series B Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Designation, Preferences and Rights creating a series of Preferred Stock or any similar stock or as otherwise required by law.

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Section 6. Liquidation, Dissolution or Winding Up.

(A) Upon any liquidation, dissolution or winding up of the Corporation, voluntary or otherwise no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series B Preferred Stock unless, prior thereto, the holders of shares of Series B Preferred Stock shall have received an amount per share (the “Series B Liquidation Preference”) equal to $10,000 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series B Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 200 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series B Preferred Stock, except distributions made ratably on the Series B Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series B Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that are outstanding immediately prior to such event.

(B) In the event, however, that there are not sufficient assets available to permit payment in full of the Series B Liquidation Preference and the liquidation preferences of all other classes and series of stock of the Corporation, if any, that rank on a parity with the Series B Preferred Stock in respect thereof, then the assets available for such distribution shall be distributed ratably to the holders of the Series B Preferred Stock and the holders of such parity shares in proportion to their respective liquidation preferences.

(C) Neither the merger or consolidation of the Corporation into or with another corporation nor the merger or consolidation of any other corporation into or with the Corporation shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this Section 6.

Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series B Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for

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adjustment hereinafter set forth, equal to 200 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series B Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 8. No Redemption. The shares of Series B Preferred Stock shall not be redeemable by the Company.

Section 9. Rank. The Series B Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, junior to the Series A Non-Voting Non-Convertible Preferred Stock and all other series of any other class of the Corporation’s Preferred Stock, except to the extent that any such other series specifically provides that it shall rank on a parity with or junior to the Series B Preferred Stock.

Section 10. Amendment. At any time any shares of Series B Preferred Stock are outstanding, neither the Certificate of Incorporation nor this Certificate of Designation, Preferences and Rights shall be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series B Preferred Stock, as set forth herein, so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series B Preferred Stock, voting separately as a single class.

Section 11. Fractional Shares. Series B Preferred Stock may be issued in fractions of a share that shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series B Preferred Stock.

FOURTH: The shares of Series B Preferred Stock have been classified and designated by the Board of Directors under the authority contained in the Certificate of Incorporation.

FIFTH: This Certificate of Amendment of Certificate of Designation, Preferences and Rights has been approved by the Board of Directors in the manner and by the vote required by law.

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SIXTH: The undersigned officer acknowledges this Certificate of Amendment of Certificate of Designation, Preferences and Rights to be the corporate act of the Corporation and, as to all matters of fact required to be verified under oath, the undersigned officer acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment of Certificate of Designation, Preferences and Rights on August _, 2003.

By:
	Fredric D. Price
	Chairman and Chief Executive Officer of
	BioMarin Pharmaceutical Inc.

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Exhibit B

Form of Right Certificate

Certificate No. R-                 Rights

NOT EXERCISABLE AFTER SEPTEMBER 23, 2012 OR EARLIER IF NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN OR IF THE COMPANY IS MERGED OR ACQUIRED PURSUANT TO AN AGREEMENT OF THE TYPE DESCRIBED IN SECTION 1.3(ii)(A)(z) OF THE AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT, AND TO EXCHANGE ON THE TERMS SET FORTH IN THE AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN SECTION 11.1.2 OF THE AGREEMENT), RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO AN ACQUIRING PERSON (AS DEFINED IN THE AGREEMENT), OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

Right Certificate

BIOMARIN PHARMACEUTICAL INC.

This certifies that                             , or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Amended and Restated Rights Agreement, dated as of February 27, 2009 as the same may be amended from time to time (the “Agreement”), between BioMarin Pharmaceutical Inc., a Delaware corporation (the “Company”), and Mellon Investor Services LLC, a New Jersey limited liability company, as Rights Agent (the “Rights Agent”), to purchase from the Company at any time after the Distribution Date and prior to 5:00 p.m. (Pacific time) on September 23, 2012, at the offices of the Rights Agent, or its successors as Rights Agent, designated for such purpose, one two-hundredth of a fully paid, nonassessable share of Series B Junior Participating Preferred Stock, $.001 par value per share (the “Preferred Shares”) of the Company, at a purchase price of $35.00 per two-hundredth of a Preferred Share, subject to adjustment (the “Purchase Price”), upon presentation and surrender of this Right Certificate with the Form of Election to Purchase and certification duly executed. The number of Rights represented by this Right Certificate (and the number of two-hundredths of a Preferred Share which may be purchased upon exercise thereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of August 7, 2003 based on the Preferred Shares as constituted at such date. Capitalized terms used in this Right Certificate without definition shall have the meanings ascribed to them in the Agreement. As provided in the Agreement, the Purchase Price and the number of Preferred Shares which may be purchased upon the exercise of the Rights represented by this Right Certificate are subject to modification and adjustment upon the happening of certain events. The Company reserves the right to require prior to the occurrence of a Trigger Event (as such term is defined in the Agreement) that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares of Preferred Stock will be issued.

B-1

This Right Certificate is subject to all of the terms, provisions and conditions of the Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates. Copies of the Agreement are on file at the principal offices of the Company and the office of the Rights Agent designated to the Company for such purposes.

This Right Certificate, with or without other Right Certificates, upon surrender at the offices of the Rights Agent designated for such purpose, may be exchanged for another Right Certificate or Right Certificates of like tenor and date representing Rights entitling the holder to purchase the same aggregate number of two-hundredths of a Preferred Share as the Rights represented by the Right Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised.

Subject to the provisions of the Agreement, the Board of Directors may, at its option, (i) redeem the Rights represented by this Right Certificate at a redemption price of $.001 per Right or (ii) exchange Common Shares for the Rights represented by this Certificate, in whole or in part. Immediately upon the action of the Board of Directors authorizing redemption, the Rights will terminate and the only right of the holders of Rights will be to receive the redemption price.

No fractional Preferred Shares will be issued upon the exercise of any Right or Rights represented hereby (other than fractions of Preferred Shares which are integral multiples of one two-hundredth of a Preferred Share, which may, at the election of the Company, be represented by depositary receipts), but in lieu thereof a cash payment will be made, as provided in the Agreement.

No holder of this Right Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the Preferred Shares or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Agreement) or to receive dividends or subscription rights, or otherwise, until the Right or Rights represented by this Right Certificate shall have been exercised as provided in the Agreement.

If any term, provision, covenant or restriction of the Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of the Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

B-2

This Right Certificate shall not be valid or binding for any purpose until it shall have been countersigned by the Rights Agent.

WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of                         , 20    .

Attest:		BIOMARIN PHARMACEUTICAL INC.
		By:
Title:			Title:
Countersigned:
MELLON INVESTOR SERVICES LLC, as Rights Agent
By:
	Authorized Signature

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Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder

desires to transfer the Right Certificate.)

FOR VALUE RECEIVED

hereby sells, assigns and transfers unto

(Please print name and address of transferee)

Rights represented by this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint Attorney, to transfer the within Right Certificate on the books of the within-named Company, with full power of substitution.

Dated:
Signature Guaranteed:	Signature
Signature Guaranteed:

Signatures must be guaranteed by an “eligible guarantor institution” as defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended.

The undersigned hereby certifies that:

(1) the Rights represented by this Right Certificate are not beneficially owned by and are not being assigned to an Acquiring Person or an Affiliate or an Associate thereof; and

(2) after due inquiry and to the best knowledge of the undersigned, the undersigned did not acquire the Rights represented by this Right Certificate from any person who is, was, had been or subsequently became an Acquiring Person or an Affiliate or Associate thereof.

Dated:
	Signature

B-4

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to

exercise the Right Certificate.)

To: BioMarin Pharmaceutical Inc.

The undersigned hereby irrevocably elects to exercise                              Rights represented by this Right Certificate to purchase the Preferred Shares issuable upon the exercise of such Rights (or such other securities or property of the Company or of any other Person which may be issuable upon the exercise of the Rights) and requests that certificates for such shares be issued in the name of:

(Please print name and address)

If such number of Rights shall not be all the Rights represented by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered in the name of and delivered to: Please insert social security or other identifying number.

(Please print name and address)

Dated: _____________________________
	Signature
Signature Guaranteed:

B-5

Signatures must be guaranteed by an “eligible guarantor institution” as defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended. The undersigned hereby certifies that:

(1) the Rights represented by this Right Certificate are not beneficially owned by and are not being assigned to an Acquiring Person or an Affiliate or an Associate thereof; and

(2) after due inquiry and to the best knowledge of the undersigned, the undersigned did not acquire the Rights represented by this Right Certificate from any person who is, was, had been or subsequently became an Acquiring Person or an Affiliate or Associate thereof.

Dated: _____________________________
	Signature

NOTICE

The signature in the foregoing Form of Assignment and Form of Election to Purchase must conform to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever.

In the event the certification set forth above in the Form of Assignment or Form of Election to Purchase is not completed, the Company will deem the beneficial owner of the Rights represented by this Right Certificate to be an Acquiring Person or an Affiliate or Associate hereof and such Assignment or Election to Purchase will not be honored.

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Exhibit C

As described in the Rights Agreement, as defined below, Rights which are held by or have been held by an Acquiring Person or Associates or Affiliates thereof (as defined in the Rights Agreement) and certain transferees thereof are null and void and are not transferable.

SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES

On September 11, 2002 the Board of Directors of BioMarin Pharmaceutical Inc. (the “Company”) authorized a dividend of one preferred share purchase right (a “Right”) for each share of common stock, $.001 par value per share (“Common Shares”) of the Company outstanding at the close of business on September 23, 2002 (the “Record Date”). As long as the Rights are attached to the Common Shares, the Company will issue one Right (subject to adjustment) with each new Common Share so that all such shares will have attached Rights. When exercisable, each Right will entitle the registered holder to purchase from the Company one one-hundredth of a share of Series B Junior Participating Preferred Stock (the “Preferred Shares”) at a price of $35.00 per one-hundredth of a Preferred Share, subject to adjustment (the “Purchase Price”). The description and terms of the Rights are set forth in a Rights Agreement, dated as of September 11, 2002, as amended and restated on August 7, 2003 and February 27, 2009, and as the same may be further amended from time to time (the “Rights Agreement”), between the Company and Mellon Investor Services LLC, a New Jersey limited liability company, as Rights Agent (the “Rights Agent”).

DETACHMENT AND TRANSFER OF RIGHTS

Initially, the Rights will be attached to all Common Stock certificates evidencing shares then outstanding, or, for Common Shares held in book-entry accounts through the direct registration services of the Company’s transfer agent, by such book entry-accounts, together with a direct registration transaction advice with respect to such shares, and no separate Rights certificates will be distributed. Until the earlier to occur of (i) ten (10) days following a public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the Common Shares (an “Acquiring Person”) or (ii) ten (10) business days (or such later date as may be determined by action of the Board of Directors prior to such time as any person or group of affiliated persons becomes an Acquiring Person) following the commencement or announcement of an intention to make a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 15% or more of the Common Shares (the earlier of (i) and (ii) being called the “Distribution Date”), the Rights will be represented, with respect to any of the Common Share certificates outstanding as of the Record Date, by such Common Share certificate (or, for Common Shares held in book-entry accounts through the direct registration services of the Company’s transfer agent, by such book entry-accounts, together with a direct registration transaction advice with respect to such shares).

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The Rights Agreement provides that until the Distribution Date (or earlier redemption, exchange, termination or expiration of the Rights), the Rights will be transferred with and only with the Common Shares. Until the Distribution Date (or earlier redemption, exchange, termination or expiration of the Rights), new Common Share certificates issued after the close of business on the Record Date upon transfer or new issuance of the Common Shares will contain a notation incorporating the Rights Agreement by reference (or, for Common Shares held in book-entry accounts through the direct registration services of the Company’s transfer agent, a legend on the direct registration transaction advice with respect to such shares). Until the Distribution Date (or earlier redemption, exchange, termination or expiration of the Rights), the surrender for transfer of any certificates for Common Shares, with or without such notation or a copy of this Summary of Rights, will also constitute the transfer of the Rights associated with the Common Shares represented by such certificate. As soon as practicable following the Distribution Date, separate certificates representing the Rights (“Right Certificates”) will be mailed to holders of record of the Common Shares as of the close of business on the Distribution Date and such separate Right Certificates alone will represent the Rights. In the event the Company elects to distribute any Rights by crediting book-entry accounts, the provisions described in this summary that reference Right Certificates will be interpreted to reflect that the Rights are credits to the book-entry accounts, that separate Right Certificates are not issued with respect to some or all of the Rights, and that any legend required on a Right Certificate may be placed on the direct registration transaction advice with respect to such Rights.

EXERCISABILITY OF RIGHTS

The Rights are not exercisable until the Distribution Date. The Rights will expire on September 23, 2012 subject to the Company’s right to extend such date (the “Final Expiration Date”), unless earlier redeemed or exchanged by the Company or terminated. Until a Right is exercised, it will not entitle its holder to any rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.

The Purchase Price payable, and the number of Preferred Shares or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights or warrants to subscribe for or purchase Preferred Shares or convertible securities at less than the current market price of the Preferred Shares or (iii) upon the distribution to holders of the Preferred Shares of evidences of indebtedness, cash, securities or assets or of subscription rights or warrants (other than those referred to above). No adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in the Purchase Price. No fractional Preferred Shares or Common Shares will be issued (other than fractions of Preferred Shares which are integral multiples of one one-hundredth of a Preferred Share, which may, at the election of the Company, be represented by depository receipts), and in lieu thereof, a payment in cash will be made based on the market price of the Preferred Shares or Common Shares on the last trading date prior to the date of exercise.

C-2

TERMS OF PREFERRED SHARES

Each Preferred Share purchasable upon exercise of the Rights will be entitled, when, as and if declared, to a minimum preferential quarterly dividend payment of $0.01 per share but will be entitled to an aggregate dividend of 100 times the dividend, if any, declared per Common Share. In the event of liquidation, dissolution or winding up of the Company, the holders of the Preferred Shares will be entitled to a minimum preferential liquidation payment of $10,000 per share (plus any accrued but unpaid dividends) but will be entitled to an aggregate payment of 100 times the payment made per Common Share. Each Preferred Share will have 100 votes and will vote together with the Common Shares. Finally, in the event of any merger, consolidation or other transaction in which Common Shares are exchanged, each Preferred Share will be entitled to receive 100 times the amount received per Common Share. Preferred Shares will not be redeemable. These rights are protected by customary antidilution provisions. Because of the nature of the Preferred Share’s dividend, liquidation and voting rights, the value of one one-hundredth of a Preferred Share purchasable upon exercise of each Right should approximate the value of one Common Share.

TRIGGER OF FLIP-IN AND FLIP-OVER RIGHTS

In the event that a person becomes an Acquiring Person, each holder of a Right, other than Rights that are or were acquired or beneficially owned by the Acquiring Person (which Rights will be void), will thereafter have the right to receive, upon exercise thereof, that number of Common Shares having a market value of two times the then-current Purchase Price of the Right. This right will commence on the date of public announcement that a person has become an Acquiring Person (or the effective date of a registration statement relating to distribution of the Rights, if later) and terminate 60 days later (subject to adjustment in the event exercise of the Rights is enjoined).

For example, at an exercise price of $35.00 per Right, each Right not owned by an Acquiring Person (or by certain related parties) following a Trigger Event would entitle its holder to purchase $70.00 worth of Common Stock (or other consideration, as noted above) for $35.00. Assuming that the Common Stock had a per share value of $10.00 at such time, the holder of each valid Right would be entitled to purchase seven shares of Common Stock for $35.00.

In the event that the Company is acquired in a merger or other business combination transaction or more than 50% of its assets or earning power are sold to an Acquiring Person, proper provision shall be made so that each holder of a Right shall thereafter have the right to receive, upon the exercise thereof at the then-current Purchase Price of the Right, that number of shares of common stock of the acquiring company which at the time of such transaction would have a market value of two times the then-current Purchase Price of the Right.

EXCHANGE OF RIGHTS

At any time after a person becomes an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding Common Shares, the Board of Directors may cause the Company to exchange the Rights (other than Rights owned by an Acquiring

C-3

Person, which will be void), in whole or in part, for Common Shares at an exchange ratio of one Common Share per Right (subject to adjustment). In effecting an exchange, the Company may enter into a trust agreement by which it transfers to a trust all Common Shares issued pursuant to the exchange. The trust would hold the Common Shares for the benefit of stockholders entitled to receive them pursuant to the exchange.

REDEMPTION

The Rights may be redeemed in whole, but not in part, at a price of $.001 per Right (the “Redemption Price”) by the Board of Directors at any time prior to the time that an Acquiring Person has become such. The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board of Directors in its sole discretion may establish. In addition, the Rights may be redeemed in connection with certain business combination transactions not involving an Acquiring Person. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.

AMENDMENT OF RIGHTS

Any of the provisions of the Rights Agreement may be amended by the Board of Directors for so long as the Rights are then redeemable, and after the Rights are no longer redeemable, the Company may amend or supplement the Rights Agreement in any manner that does not adversely affect the interests of the holders of the Rights.

ADDITIONAL INFORMATION

The Rights are designed to assure that all of the Company’s stockholders receive fair and equal treatment in the event of any proposed takeover of the Company and to guard against partial tender offers, open market accumulations and other abusive tactics to gain control of the Company without paying all stockholders a control premium. The Rights will cause substantial dilution to a person or group that acquires 15% or more of the Company’s stock on terms not approved by the Company’s Board of Directors. The Rights should not interfere with any merger or other business combination approved by the Board of Directors at any time before a person or group has become an Acquiring Person.

A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an Exhibit to the Company’s Annual Report on Form 10-K. A copy of the Rights Agreement is available free of charge from the Company. This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is incorporated herein by reference.

C-4

Exhibit D

RIGHTS AGENCY FEES

Item	Fee
Acceptance Fee	$	2,500
Annual Administration Fee	$	2,500
Legal Out-of-Pocket Expenses *
Fee for reviewing the Agreement	$	1,500
Fee for reviewing an Amendment	$	750

* All rights agreements will be reviewed by outside counsel. The expenses associated with the review by outside counsel will be passed on to the client as an out-of-pocket expense. The amounts quoted above represent approximate billing amounts for the work described. The amount charged to the client could be more, or less, depending on the complexity of the work done by the outside counsel.

D-1

EX-10.29

Exhibit 10.29

EXECUTION VERSION

CONFIDENTIAL TREATMENT REQUESTED

Redacted Portions are indicated by [****]

DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

THIS DEVELOPMENT AND COMMERCIALIZATION AGREEMENT (“Agreement”) dated as of January 4, 2009 (“Effective Date”), is entered into between La Jolla Pharmaceutical Company, a Delaware corporation having its principal place of business at 6455 Nancy Ridge Drive, San Diego, California 92121 (“La Jolla”) and BioMarin CF Limited, an Irish corporation having its registered place of business at 2 Earlsfort Terrace, Dublin 2, Ireland (“BioMarin CF”).

BACKGROUND

A. La Jolla is developing a formulation of abetimus sodium (as further defined below, a “Product”) for the treatment of lupus nephritis and systemic lupus erythematosus (“SLE”). La Jolla owns or controls certain patents, know-how and other intellectual property relating to such Products.

B. BioMarin CF, through its Affiliates, is an established biopharmaceutical company which focuses its experience and expertise in the development and commercialization of products for the treatment of rare diseases.

C. BioMarin CF desires to obtain a right to participate fully in the co-development and co-commercialization of Products in the United States, and exclusive rights in the development and commercialization of Products in all other countries except for the countries in the Asia-Pacific region.

D. La Jolla is willing to grant to BioMarin CF such rights on the terms and conditions set forth in this Agreement.

E. Concurrently with this Agreement, the Parties or their respective Affiliates are entering into a Securities Purchase Agreement under which La Jolla shall issue to an Affiliate of BioMarin CF shares of capital stock of La Jolla, all as set forth in such Securities Purchase Agreement (as further defined below, the “Securities Purchase Agreement”).

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1 “Adverse Event” or “AE” shall mean any untoward medical occurrence in a patient or clinical investigation subject administered a pharmaceutical product and which does not necessarily have a causal relationship with administration of a Product. AEs include, without limitation, any unfavorable and unintended sign (including an abnormal laboratory finding), symptom, or disease temporally associated with the use of a medicinal (investigational) product, whether or not related to the medicinal (investigational) product.

1.2 “Affiliate” of a Party shall mean any person, corporation or other entity that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Party, as the case may be, for as long as such control exists. As used in this Section 1.2, “control” shall mean: (a) to possess, directly or indirectly, the power to affirmatively direct the management and policies of such person, corporation or other entity, whether through ownership of voting stock or by contract relating to voting rights or corporate governance; or (b) direct or indirect beneficial ownership of at least fifty percent (50%) (or such lesser percentage that is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) of the voting stock or other ownership interest in such person, corporation or other entity. A “Controlled Affiliate” is an Affiliate that is controlled by a Party, or if such Party is Controlled by another entity as of the Effective Date, an Affiliate that is Controlled by the ultimate parent entity that Controls such Party as of the Effective Date.

1.3 “Annual Net Sales” shall mean total Net Sales of Products sold by BioMarin CF, BioMarin CF’s Affiliates or Sublicensees in the Territory in a particular calendar year. For such purposes, units of the Product shall be considered sold when the revenue from such sale is recognized by the seller for financial reporting purposes.

1.4 “Asia-Pacific Territory” shall mean the Asia-Pacific countries listed on Exhibit 1.4.

1.5 “ASPEN Study” shall mean the 90-14 Phase III clinical trial and the 90-18 QT study for the Product ongoing as of the Effective Date, each as further described on Exhibit 1.5.

1.6 “BioMarin CF” shall mean BioMarin CF and its respective Affiliates performing its obligations, exercising its rights or otherwise conducting activities hereunder, except to the extent specifically indicated otherwise.

1.7 “BioMarin CF Know-How” shall mean all scientific, medical, technical, marketing, regulatory, manufacturing and other information relating to the Compound and/or any Product (including Data), which are both: (i) developed, acquired or used by BioMarin CF in the performance of this Agreement, and (ii) needed by La Jolla to perform the Operating Plan/Budget, exercise its rights under this Agreement or manufacture or secure Marketing Approval for the Products for sale outside the Territory.

1.8 “Commercial Life” [****]

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1.9 “Compound” shall mean that certain compound known as abetimus sodium, the structure of which is set forth on Exhibit 1.9, and any other nucleic acid based molecule that binds to or targets anti-double stranded DNA antibodies.

1.10 “Control” (including any variations such as “Controlled” and “Controlling”), in the context of intellectual property rights of a Party, shall mean that such Party or its Controlled Affiliate owns or possesses rights to intellectual property sufficient to grant the applicable license under this Agreement, without violating the terms of an agreement with a Third Party or as a result of obtaining a prior written consent from a Third Party.

1.11 “CTA” shall mean a clinical trial application (including any amendments thereto) as provided for in Directive 2001/20/EC and the regulations promulgated thereunder for initiating clinical trials in the European Union.

1.12 “Data” shall mean: (a) any and all research data, pharmacology data, preclinical data, and clinical data for the Compound and/or Products; (b) all regulatory documentation, information, filings and submissions pertaining to, or made in association with an IND, Marketing Application, Marketing Approval or the like, for a Product; and/or (c) any other data relating to the Compound and/or Products.

1.13 “Dosing Study” shall mean a clinical study evaluating dsDNA antibodies while administering the Product monthly at 300mg or 900mg, with the exact study protocol to be mutually agreed by the Parties, which may include an induction regimen of weekly dosing for up to twelve (12) weeks and which shall include at least one arm having monthly dosing of such Product. The Dosing Study (a) may also include measurement of proteinuria, and (b) will not be run for the purpose of changing the label for the Product.

1.14 “EMEA” shall mean the European Medicines Evaluation Agency, or any successor entity thereto performing similar functions.

1.15 “Existing In-License” shall mean the license agreement listed on Exhibit 1.15 between La Jolla and the Third Party identified on such exhibit in effect as of the Effective Date.

1.16 “FDA” shall mean the United States Food and Drug Administration, or any successor entity thereto performing similar functions.

1.17 “Financial Appendix” shall mean Appendix A to this Agreement.

1.18 “FTE” means a full-time equivalent person year (consisting of a total of at least 1,760 hours per year) from an employee of a Party or one of its Affiliates assigned to perform specific work, as specified in the Operating Plan/Budget.

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1.19 “Full Participation Point” shall mean the date that BioMarin CF exercises its full license rights pursuant to Section 2.1(b) by paying to La Jolla (subject to any reduction provided by Section 7.18):

(a) Forty-Seven Million Five Hundred Thousand Dollars ($47,500,000), inclusive of the equity purchase, pursuant to Section 7.2(c);

(b) Fifty-Five Million Dollars ($55,000,000), inclusive of the equity purchase, pursuant to Section 7.3(a)(i);

(c) Fifteen Million Dollars ($15,000,000), inclusive of the equity purchase, pursuant to Section 7.3(a)(ii)(y);

(d) Fifty-Five Million Dollars ($55,000,000), inclusive of the equity purchase, pursuant to Section 7.4(b); or

(e) Fifty-Five Million Dollars ($55,000,000) less amounts paid under Section 7.13(a), inclusive of the equity purchase pursuant to Section 7.13(b).

The Full Participation Point shall occur at such time as any amount set forth in this definition is paid in full by BioMarin CF and does not depend on any further or other payment by BioMarin CF; provided that if BioMarin CF exercises its right to pay a portion of any such payment by purchasing shares of common stock of La Jolla pursuant to the Securities Purchase Agreement and as contemplated by Section 7.5 and thereafter due to the default, breach of a representation or failure of La Jolla to satisfy a condition to closing thereunder, BioMarin CF is not able to purchase such shares, the Full Participation Point shall nonetheless be deemed to have occurred notwithstanding that BioMarin CF has not paid to La Jolla that portion of the payment due that is attributable to the purchase of such shares.

1.20 “IND” shall mean any Investigational New Drug Application (including any amendments thereto) filed with the FDA pursuant to 21 C.F.R. § 312 before the commencement of clinical trials of a Product, or any comparable filings with any Regulatory Authority in any other jurisdiction, including any CTA.

1.21 “Interim Efficacy Analysis” shall mean individually, the First Interim Efficacy Analysis or the Second Interim Efficacy Analysis, each as defined in this Section 1.21; and “Interim Efficacy Analyses” shall mean the First Interim Efficacy Analysis and the Second Interim Efficacy Analysis, collectively.

(a) “First Interim Efficacy Analysis” shall mean the receipt by La Jolla of the Data Monitoring Board’s recommendation with respect to the continued conduct of the 90-14 portion of the ASPEN Study based upon the interim efficacy analysis conducted when ninety-two (92) renal flare events adjudicated as SLE-related are accrued in the ASPEN Study.

(b) “Second Interim Efficacy Analysis” shall mean the receipt by La Jolla of the Data Monitoring Board’s recommendation with respect to the continued conduct of the 90-14 portion of the ASPEN Study based upon the interim efficacy analysis conducted when one hundred and nine (109) renal flare events adjudicated as SLE-related have been accrued in the ASPEN Study.

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For the purposes of this Section 1.21, renal flare events will be deemed to be SLE-related and to have accrued in the ASPEN Study if so determined by the Renal Events Committee.

1.22 “Joint Patent” shall mean any Patent with respect to an invention that is jointly owned pursuant to Section 11.1(a) within or outside the Territory.

1.23 “Know-How” shall mean La Jolla Know-How or BioMarin CF Know-How, as the context requires.

1.24 “La Jolla Know-How” shall mean all scientific, medical, technical, marketing regulatory, manufacturing, and other information, in each case relating to the Compound and/or any Product (including Data), that is (a) existing as of the Effective Date or that is developed, acquired or used by La Jolla in the performance of the Operating Plan/Budget, and (b) needed by BioMarin CF to perform the Operating Plan/Budget or exercise its rights under this Agreement.

1.25 “La Jolla Patents” shall mean (a) the Patents listed on Exhibit 1.25; (b) any other Patents in the Territory that are related to or otherwise necessary or reasonably useful to develop, manufacture, or commercialize a Compound and/or Product(s) in accordance with the Operating Plan/Budget that are or were developed, acquired or used by La Jolla; (c) any Patents based on any invention conceived or created solely by La Jolla personnel in connection with this Agreement pursuant to Section 11.1(a); and (d) all additions, divisions, continuations, continuations-in-part, substitutions, reissues, re-examinations, extensions, registrations, patent term extensions, supplemental protection certificates and renewals of any of the foregoing.

1.26 “La Jolla’s Knowledge” shall mean the actual knowledge of the members of La Jolla’s senior management team (as defined in Exhibit 1.26) after reasonable inquiry sufficient to express an informed view concerning the matters to which such representation or warranty relates.

1.27 “Major Market” [****].

1.28 “Marketing Approval” shall mean, with respect to each country or jurisdiction, approval of the Marketing Application filed in such country by the Regulatory Authority in such country or jurisdiction.

1.29 “Marketing Application” shall mean an NDA (or its equivalent) submitted to the FDA in the United States, an MAA (or its equivalent) submitted to the EMEA in the European Union, or a corresponding application that has been submitted to a Regulatory Authority in any other jurisdiction.

1.30 “MAA” shall mean a Marketing Authorization Application (including any amendments thereto) filed with the EMEA for approval to market and sell a Product within the European Union.

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1.31 “NDA” shall mean a New Drug Application (including any supplements and amendments thereto) filed with the FDA pursuant to 21 U.S.C. Section 353(b)(1), or any equivalent application filed with the FDA for approval to market and sell a Product within the United States.

1.32 “Party” shall mean La Jolla or BioMarin CF individually, and “Parties” shall mean La Jolla and BioMarin CF collectively.

1.33 “Patent(s)” shall mean any patents and patent applications, together with all additions, divisions, continuations, continuations-in-part, substitutions, reissues, re-examinations, extensions, registrations, patent term extensions, supplemental protection certificates and renewals of any of the foregoing.

1.34 “Positive Dosing Study” shall mean a Dosing Study that demonstrates a reduction in dsDNA antibodies that, in monthly dosing of the Product, is approximately equivalent to the reduction observed in the control population in the Dosing Study receiving the Product weekly, and need not include achievement of any endpoint pertaining to proteinuria.

1.35 “Product” shall mean any product containing the Compound, alone or in combination with one or more other active pharmaceutical ingredients, in any dosage form or formulation.

1.36 “Product Trademarks” shall mean: (a) the trademarks owned by La Jolla and designated by La Jolla for use with a Product within the Territory, as reflected in Exhibit 1.36 hereto; or (b) any other trademarks mutually agreed upon by La Jolla and BioMarin CF for use with a Product within the Territory.

1.37 “PV Procedures” shall mean the pharmacovigilance procedures to be determined by BioMarin CF from time to time that are generally applicable to BioMarin CF’s distributors and marketing agents and are acknowledged by La Jolla.

1.38 “Regulatory Authority” shall mean the FDA, the EMEA, or a regulatory body with similar regulatory authority in any other jurisdiction within the Territory.

1.39 “Sales Representative” shall mean a professional pharmaceutical sales representative engaged or employed by either Party or one of its Affiliates to conduct sales activities and other promotional efforts with respect to a Product and the first line direct supervisors of those individuals.

1.40 “SOP” shall mean a standard operating procedure.

1.41 “Securities Purchase Agreement” shall mean the form of securities purchase agreement attached to this Agreement as Exhibit 1.41.

1.42 “Sublicensee” shall mean an entity to whom BioMarin CF has granted a right to manufacture, sell, market, distribute and/or promote a Product within the Territory pursuant to Section 2.2; and “Sublicense” shall mean an agreement or arrangement between BioMarin CF and a Sublicensee granting such rights.

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1.43 “Territory” shall mean worldwide, except for the Asia-Pacific Territory.

1.44 “Third Party” shall mean any person, corporation, joint venture or other entity, other than La Jolla, BioMarin CF and their respective Affiliates.

1.45 “United States” shall mean the United States of America, including its territories and possessions.

1.46 Additional Definitions. In addition, each of the following terms shall have the meaning described in the corresponding section in the body of this Agreement or in the Financial Appendix referenced below:

Term	Section Defined
Agreement	Introduction
All Other Costs	Exhibit 4.2E
Asia-Pacific License	2.4(a)
Asia-Pacific Licensee	2.4(b)
Auditing Party	7.17(a)
BioMarin CF Improvements	11.1(c)
BioMarin CF Indemnitees	16.2
Capitalized Asset	Financial Appendix
Co-Chair	3.3
Collaboration Agreement	Financial Appendix
Completion Notice	7.7
Confidential Information	10.1
Contingent Right	2.4(f)
Controlled Affiliate	1.2
Cost Effective Price	9.1(a)
Data Monitoring Board	7.6(a)
Definitive Agreement	2.4(c)
Development Costs	Financial Appendix
Development Transition Period	14.4(a)(i)
Dispute	17.2
Distribution Costs	Financial Appendix
Effective Date	Introduction
Eliminated Party	14.4(a)(i)
Enforcement Action	11.3(b)(i)
Equity Election Notice	7.5
Fault of BioMarin CF	16.4(b)(ii)
Fault of La Jolla	16.4(b)(i)
Field-Based FTEs	6.2(a)(i)
First Commercial Sale	Financial Appendix
FTE Costs	Financial Appendix
Force Majeure Event	18.1
Forecast	Exhibit 9.1A
Futile Determination	7.6(b)
GAAP	Financial Appendix
GMP	5.4
Gross Sales	Financial Appendix
IFRS	Financial Appendix
Indemnitee	16.3
Indemnitor	16.3
Infringement	11.3(a)
Infringement Actions	11.4
Initial Operating Plan/Budget	4.2(b)
Initial Product	4.3(a)
Inspected Party	5.3
Interest Rate	7.14(b)
IP Management Costs	Financial Appendix
JAMS	17.3(a)
Joint Promotion Plan	6.2(c)
Joint Steering Committee or JSC	3.1(a)
JHU License	Exhibit 1.15
La Jolla Improvements	11.1(c)

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Term	Section Defined
La Jolla Indemnitees	16.1
Launch-1st Year Period	Exhibit 4.2E
Liabilities	16.1
Manufacturing Costs	Financial Appendix
Manufacturing Process Development	4.2(e)(ii)
Marketing Costs	Financial Appendix
Maximum Regional Spend	Exhibit 4.2E
Multiple Product Sales	Financial Appendix
Negotiation Period	2.4(c)
New Technology	11.6(c)
Net Sales	Financial Appendix
Non-Futile Determination	7.6(b)
Objecting Party	17.2
Ongoing Trials	14.4(a)(i)
Operating Forecast	4.2(a)
Operating Plan/Budget	4.2(a)
Other Operating Expense	Financial Appendix
Other Operating Income	Financial Appendix
Out-of-Pocket Expenses	Financial Appendix
Paying Party	Financial Appendix
Phase IV Studies	Exhibit 4.2E
Prior Agreement	10.6
Producing Party	9.4(a)
Product Liability Claim	16.5(a)
Product Promotional Materials	12.1
Profit/Loss	Financial Appendix
Promotional/Sales/Marketing or PSM	Exhibit 4.2E
Proposed Territory	2.4(a)
Prosecution and Maintenance or Prosecute and Maintain	11.2(c)
Publication	10.4
Purchased Interests	14.2.2(a)
Purchase Notice	14.2.2(b)
Purchase Price	14.2.2(a)
Purchase Right	14.2.2(a)
P-Value Achievement	7.6(c)
Quarterly Measurement	Exhibit 4.2E
Q4, Q5 and Q6	Exhibit 9.1A
Recall Costs	16.4(b)
Region	Exhibit 4.2E
Remaining Party	14.4(a)(i)
Renal Events Committee	7.6(d)
Report Table	Financial Appendix
Responding Party	7.17(a)
ROT	Exhibit 4.2E
Royalty Notice	6.3
R&D/LCM	Exhibit 4.2E
Sale Price	14.2.1
Sale Right	14.2.1
Sales Costs	Financial Appendix
Sales Force Deployment Option	6.2(a)
Shared Costs	Financial Appendix
SEC	Financial Appendix
Secured Note	14.2.1
SLE	Background
Sold Interests	14.2.1
Third Party Claim	16.1
Wind-down Period	14.4(a)(ii)
Working Group	3.2
2nd Year of Sales	Exhibit 4.2E
128 Flare Topline Data	7.6(e)

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ARTICLE II

GRANT OF LICENSE

2.1 License.

(a) Subject to the terms and conditions of this Agreement, La Jolla hereby grants to BioMarin CF a co-exclusive license during the term of this Agreement under the La Jolla Patents, Joint Patents, and La Jolla Know-How: (i) to develop, use, offer for sale, sell, import, export, market, distribute and promote the Compound as incorporated into any Product in the Territory in any and all fields, including the treatment and/or prevention of any disease or health condition in humans or animals in accordance with this Agreement; and (ii) to make or have made the Compound or any component of the Compound anywhere in the world provided that if it is made outside of the Territory it will only be sold in the Territory pursuant to the terms of this Agreement.

(b) The rights and license granted by La Jolla to BioMarin CF in Section 2.1(a) shall commence on the Effective Date, but BioMarin CF agrees not to exercise such rights or license unless and until BioMarin CF has effected the Full Participation Point in accordance with Sections 7.2, 7.3, 7.4 or 7.13(b) below, except that until the Full Participation Point BioMarin CF shall be able to exercise such rights as are necessary for manufacturing of the Product and/or Compound. As used in this Section 2.1, the term “co-exclusive” means that the rights and licenses granted: (i) under Section 2.1(a)(i) shall be exclusive even as to La Jolla, except with respect to: (A) La Jolla’s rights to co-develop Products in accordance with Article 4; and (B) La Jolla’s rights to co-commercialize, but expressly excluding the right to sell, Products solely in the United States in accordance with Article 6; and (ii) under Section 2.1(a)(ii) shall be exclusive, except with respect to the rights of La Jolla and its contractors to manufacture, pursuant to Article 9 below, Compounds and Products for sale by BioMarin CF pursuant to this Agreement and for La Jolla, an Asia-Pacific Licensee and/or their respective contractors to make, the Compound or Product or any component thereof, within or outside of the Territory for use and sale outside the Territory in every case subject to Section 2.3.

2.2 Sublicensees. After BioMarin CF has effected the Full Participation Point in accordance with Sections 7.2, 7.3, 7.4 or 7.13(b) below, BioMarin CF shall have the right to grant sublicenses under Section 2.1(a) to any of its Affiliates or to any Third Party in any country of the Territory; provided that any Sublicense to a Third Party that includes the right to substantially all of the sale, marketing and distribution of Products in any Major Market shall be subject to La Jolla’s prior written consent, which may be granted or withheld in La Jolla’s sole and absolute discretion. In any event, BioMarin CF shall ensure that each of its Sublicensees is bound by a written agreement containing provisions at least as protective of La Jolla as this Agreement; and BioMarin CF shall remain responsible to La Jolla for all activities of its Affiliates and Sublicensees to the same extent as if such activities had been undertaken by BioMarin CF itself. Promptly following the execution of each Sublicense, BioMarin CF shall inform La Jolla of the scope and territory of each Sublicense and the name and address of each Sublicensee.

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2.3 Unauthorized Activities; Activities Outside the Territory.

(a) BioMarin CF Rights Limited. BioMarin CF agrees that neither it, nor any of its Affiliates, will develop, file for Marketing Approval with respect to, make, have made, use, market, offer for sale, sell, import, export, distribute or promote a Product anywhere in the world, except in the Territory and, within the Territory, only in accordance with this Agreement. BioMarin CF agrees that neither it, nor any of its Affiliates, will use or otherwise exploit, except as expressly licensed under this Agreement, any La Jolla Patents, La Jolla Know-How and/or Product Trademarks, or their counterparts in any country. Notwithstanding whether or not La Jolla has complied with Section 2.3(b)(i), in the event that any Product, other than Product that is manufactured for sale by BioMarin CF pursuant to this Agreement, is sold or distributed in the Territory other than by or through BioMarin CF or its Sublicensees, La Jolla shall pay to BioMarin CF an amount equal to three (3) times the Net Sales value of the Product so sold or distributed within five (5) business days of the date BioMarin CF provides evidence demonstrating such sale or distribution in the Territory.

(b) Territorial Integrity.

(i) [****]

(ii) [****]

(iii) It is understood that nothing in this Section 2.3(b) shall be deemed to prevent La Jolla or its designee from making the Compound and Products within or outside the Territory for supply to BioMarin CF in accordance with Article 9 below or for use or sale in the Asia-Pacific Territory.

2.4 Asia-Pacific Matching Right.

(a) [****].

(b) [****].

(c) [****]

(d) [****].

(e) [****]

(f) No Implied Obligations. The only obligations of BioMarin CF and La Jolla under this Section 2.4 are as expressly stated herein, and there are no further implied obligations relating to the matters contemplated therein. Without limiting the foregoing, it is understood that: (A) La Jolla is not at any time obligated to disclose the identity of a Third Party with whom it is discussing a Third Party agreement; (B) this Section 2.4 shall not be deemed to apply to a transaction by which a Third Party acquires substantially all of the business or assets of La Jolla so

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long as such acquiror remains bound by all of the terms and conditions hereof, nor any transaction pursuant to which La Jolla grants a license to a Third Party in the Asia-Pacific Territory solely for the purposes of acting a contract manufacturer to supply Compound or Product (or intermediate materials for either of the foregoing) to La Jolla; and (C) if La Jolla enters into a transaction with a Third Party, after making an offer to BioMarin CF that complies with this Section 2.4 (other than Section 2.4(e), which will continue to apply), that includes the grant by La Jolla of an option or other contingent right to acquire the right to market and/or distribute any Product in the Asia-Pacific Territory, or any portion thereof (a “Contingent Right”), then the grant of rights by La Jolla upon a Third Party’s exercise of such Contingent Right shall not be subject to this Section 2.4 so long as the grant of such Contingent Right was made in a transaction entered into with the Third Party in compliance with this Section 2.4.

(g) Audit Rights. If BioMarin CF does not enter into an Asia-Pacific License with La Jolla and La Jolla thereafter enters into an Asia-Pacific License with an Asia-Pacific Licensee, BioMarin CF shall have the right to have an accounting firm of its designation compare the Asia-Pacific License entered into by La Jolla to the final form of license agreement offered to BioMarin CF to determine if La Jolla has complied with Section 2.4(b) and all payments to be received by La Jolla through the date of such audit have been paid to La Jolla.

(h) Right to Share Information. Nothing contained in this Section 2.4 shall prohibit La Jolla from providing to an Asia-Pacific Licensee (or a prospective Asia-Pacific Licensee) the information permitted to be shared as specified in Section 4.3(a) (so long as La Jolla protects such information under an appropriate non-disclosure agreement and limits its use to the Proposed Territory as required by this Agreement).

ARTICLE III

GOVERNANCE

3.1 Joint Steering Committee.

(a) Establishment. Within thirty (30) days following the Effective Date, La Jolla and BioMarin CF shall establish a joint steering committee (“Joint Steering Committee” or “JSC”) to oversee, review and coordinate the activities of the Parties under this Agreement as provided in this Section 3.1, including, the development of Products for registration, and the marketing and distribution of Products, within the Territory, and the manufacture of the Compound and Products for use and sale in the Territory, all subject to the provisions of this Article 3.

(b) Duties. The JSC shall:

(i) Review and approve changes to each Operating Plan/Budget in accordance with this Agreement;

(ii) Provide a forum for the Parties to exchange information and coordinate their respective activities with respect to matters pertaining to the development, manufacture, and commercialization of the Products in the Territory, and matters pertaining to the registration of Products in the Territory;

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(iii) Coordinate the overall activities and integration of the Working Group and functional sub-working groups and resolve matters specifically assigned to be decided by the Working Group in this Agreement that the Working Group is unable to resolve; and

(iv) Perform such other duties as are specifically assigned to the JSC in this Agreement or the Financial Appendix.

3.2 Establishment of Working Group. The JSC shall establish, and to the extent it deems appropriate, delegate duties to a working group to plan and coordinate particular projects or activities (the “Working Group”), including but not limited to: (i) plan and coordinate the conduct of the development activities and regulatory matters for the Products within the Territory, (ii) coordinate the manufacturing and supply of the Products for use or sale within the Territory or as otherwise contemplated in Article 9, and (iii) coordinate the conduct of the commercialization, marketing and promotion activities for the Products in the Territory and to plan and coordinate any joint promotion activities in the United States, if applicable. The Working Group and its activities shall be subject to the oversight, review and approval of, and shall report to, the JSC. The Working Group shall be composed of an equal number of representatives from each Party, selected by such Party, and the total number of members of the Working Group will be determined by the JSC, but in no event shall be less than three (3) representatives from each Party. The Working Group shall meet at such times as directed by the JSC or more frequently as determined by the Working Group, but in no event less than once each calendar quarter. The Working Group meetings may be conducted by telephone, video-conference or in-person as determined by the Working Group; provided, however, that the Working Group shall meet in-person at least once each calendar quarter and, unless otherwise agreed by the Parties, all in-person meetings of the Working Group shall be held on an alternating basis between La Jolla’s facilities and BioMarin CF’s facilities, in each event except as unanimously agreed by the JSC. In no event shall the authority of the Working Group exceed that specifically delegated to it by the JSC. The Working Group may establish subordinate committees to oversee or handle different aspects of the Working Group’s responsibilities.

3.3 JSC Membership. The JSC shall be composed of an equal number of representatives from each of BioMarin CF and La Jolla, selected by such Party. Unless the Parties otherwise agree, the exact number of representatives for each of BioMarin CF and La Jolla shall be three (3) representatives, with each representative at the Vice President (or its equivalent) level or above. Each Party shall designate a co-chair for the meetings of the JSC (each, a “Co-Chair”). The Co-Chairs shall: (i) coordinate and prepare the agenda for, and ensure the orderly conduct of, the JSC’s meetings; and (ii) within ten (10) business days after the JSC’s meeting, prepare and circulate the minutes of such meeting accurately reflecting the discussions and decisions of the JSC. Such minutes from the JSC’s meeting shall not be finalized until the applicable Co-Chair from each Party has reviewed and confirmed the accuracy of such minutes in writing. Either Party may replace its respective Co-Chairs and other representatives at any time with prior written notice to the other Party; provided that the criteria for composition of the JSC set forth above continues to be satisfied following any such replacement of a Party’s representative on the JSC. In the event the Co-Chair of the JSC from either Party is unable to attend or participate in a particular JSC meeting, such Party may designate a substitute Co-Chair for the meeting.

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3.4 JSC Meetings. The JSC shall meet at least once each calendar quarter, or more or less often as otherwise agreed to by the Parties. The JSC meetings may be conducted by telephone, video-conference or in-person as agreed to by the Parties; provided, however, that the JSC shall meet in-person at least once each calendar quarter. Unless otherwise agreed by the Parties, all in-person meetings for the JSC shall be held on an alternating basis between La Jolla’s facilities and BioMarin CF’s facilities. Each Party shall bear its own personnel and travel costs and expenses relating to the JSC meetings. With the consent of the Parties (not to be unreasonably withheld or delayed), other employee representatives of the Parties may attend the JSC meeting as non-voting observers.

3.5 Decision-Making. Decisions of the JSC, as well as the decisions or recommendations of the Working Group, shall be made by unanimous vote, with at least one (1) representative from each Party participating in any vote. In the event that the Working Group or the JSC fails to reach unanimous agreement with respect to a particular matter within its authority, then such matter shall be resolved under the procedures set forth in Section 17.1.

3.6 Scope of Governance. Notwithstanding the creation of the JSC and the Working Group, each Party shall retain the rights, powers and discretion granted to it under this Agreement, and the JSC and the Working Group shall not be delegated or vested with rights, powers or discretion unless such delegation or vesting is expressly provided in this Agreement, or the Parties expressly so agree in writing. Neither the JSC, nor the Working Group, shall have the power to amend or modify this Agreement, and no decision of the JSC, nor any decision or recommendation of the Working Group, shall be in contravention of any terms and conditions of this Agreement. It is understood and agreed that issues to be formally decided by the JSC, or to the extent applicable, by the Working Group, are only those specific issues that are expressly provided in this Agreement to be decided by the JSC or, to the extent applicable, the Working Group.

ARTICLE IV

DEVELOPMENT; OPERATING PLAN BUDGET

4.1 Overall Efforts in Development.

(a) Prior to the Full Participation Point, La Jolla shall use its best efforts to prepare for the filing and prosecution and to maintain the NDA for the Product in the United States and the MAA in the European Union and shall otherwise conduct all development activities with respect to Products for the Territory in accordance with the Operating Plan/Budget, subject to the oversight of the JSC and the Working Group; provided that La Jolla is not hereby guaranteeing that the FDA will issue the NDA or that the EMEA will issue the MAA. Unless otherwise agreed by the Parties, BioMarin CF will not perform any development activities under the Operating Plan/Budget other than manufacturing related activities prior to the Full Participation Point. Prior to the Full Participation Point, La Jolla shall use diligent efforts to implement the Operating Plan/Budget in a prompt and expeditious manner and in a manner designed to obtain Marketing Approvals for the

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existing Product in the United States and the European Union; and La Jolla shall use diligent efforts to ensure that the Operating Plan/Budget provides at all times for adequate activities, resources and funding to achieve such results in an expeditious and efficient manner. Notwithstanding the foregoing prior to the Full Participation Point, such obligations shall not require La Jolla to initiate or conduct an efficacy trial in humans other than the ASPEN Study. The foregoing diligence obligations shall not apply if there is a Futile Determination or, if based upon receipt of the 128 Flare Topline Data, the ASPEN Study does not result in a P-Value Achievement. The Parties acknowledge that the up front payments to be, and such additional payments as are described in Sections 7.2-7.4 and 7.13(b) as may be, paid by BioMarin CF are in support of La Jolla’s conduct of the ASPEN Study and other research and development activities with respect to the Compound and Products and accordingly, prior to the Full Participation Point, La Jolla agrees that it shall not fund the development of any product, other than the Compound and Products if such funding causes La Jolla’s remaining net available cash to be less than one hundred ten percent (110%) of the amount reasonably necessary to fund the Operating Plan/Budget through receipt of the 128 Flare Topline Data. For clarity, subject to the preceding sentence, La Jolla may conduct research and development activities for any other programs or products.

(b) After the Full Participation Point, La Jolla and BioMarin CF shall each use diligent efforts to implement the Operating Plan/Budget in a prompt and expeditious manner, and in a manner designed to obtain Marketing Approvals for Products in each Major Market and for such other countries within the Territory as may be commercially reasonable and to commercialize the Products in such countries. The Parties shall use diligent efforts to ensure that the Operating Plan/Budget provides at all times for adequate activities, resources and funding to achieve such results, in an expeditious and efficient manner. Without limiting the foregoing, subject to Section 4.1(b) below, it is understood that after the Full Participation Point, the Operating Plan/Budget will at all times provide for both Parties to have significant roles in the development activities for Products within the Territory. In the case of La Jolla, such role in development activities for the Products shall included, at a minimum: (i) conducting Phase IV Studies (as defined in Exhibit 4.2E) for the existing Product in the United States; and the allocation of La Jolla FTEs for the performance of such Phase IV Studies; and (ii) reasonable consideration shall be given to La Jolla’s existing expertise in developing Products and, where appropriate, as determined by the JSC, such expertise will be utilized in the ongoing research and development and life cycle management of Products. Neither La Jolla nor BioMarin CF shall have an obligation to use diligent efforts to execute with respect to a Product in any country after the Commercial Life of such Product in such country.

(c) ASPEN Study. Unless the Parties otherwise mutually agree, La Jolla shall be responsible for the conduct and management of the ASPEN Study, both prior to and after the Full Participation Point, provided that BioMarin CF will be informed of the status of the ASPEN Study on a regular basis and will have complete access to all Data generated from the ASPEN Study at all times. Unless expressly agreed by both La Jolla and BioMarin CF, no Operating Plan/Budget will materially alter the conduct of the ASPEN Study as set forth in the protocol submitted to the FDA prior to the Effective Date.

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(d) Development Costs. The costs of performing all development and regulatory activities pursuant to the Operating Plan/Budget prior to the Full Participation Point (including the performance of the ASPEN Study up to the Full Participation Point), shall be at La Jolla’s sole expense. After the Full Participation Point, the costs of implementing all development and regulatory activities pursuant to the Operating Plan/Budget (including the remaining portion of the ASPEN Study, if applicable) shall be shared equally by the Parties in accordance with Section 7.12 and the Financial Appendix, except as provided in Section 4.2(d)(ii) below.

(e) Dosing Study. [****]

4.2 Operating Plan/Budget.

(a) General. With the assistance of the Working Group, the JSC shall establish a rolling three (3) calendar year plan and budget for (i) the cooperative development of, and regulatory activities for, the Products, (ii) the manufacturing activities for the Products, including without limitation process development, and (iii) the marketing, promotion and commercialization of the Products within the Territory under this Agreement (as such plan and budget may be amended from time to time in accordance with this Agreement, and as approved by the JSC, the “Operating Plan/Budget”). The Operating Plan/Budget will be established in such a way as to incorporate the business objectives described in Section 4.1(b) and 6.1(a). [****] The Operating Plan/Budget will include sufficient funding for the Dosing Study. It is understood that the JSC will modify and update the Operating Forecast annually in connection with the procedure for amending and updating the Operating Plan/Budget under Sections 4.2(c) and 4.2(d) below.

(b) Initial Operating Plan/Budget. An initial Operating Plan/Budget for Products within the Territory is attached to this Agreement as Exhibit 4.2B (“Initial Operating Plan/Budget”). The Initial Operating Plan/Budget shall be deemed to be the Operating Plan/Budget for all purposes of this Agreement until such Initial Operating Plan/Budget is updated in accordance with Section 4.2(d) below.

(c) Amendments. The JSC shall review the Operating Plan/Budget on an ongoing basis, and in no event less frequently than once each calendar year (as set forth in Section 4.2(d) below), or more frequently as needed to take into account completion, commencement or cessation of activities not contemplated by the then-current Operating Plan/Budget. The Working Group shall submit to the JSC as a proposal an amendment to the Operating Plan/Budget in advance of implementation of such amendment, including any amendment that effects a material change in the budget or timeline in effect for the current year of such Operating Plan/Budget.

(d) Timing and Process for Annual Amendments.

(i) No later than [****] of each calendar year after the Effective Date commencing in 2009, the Working Group shall present to the JSC for its review and approval its plans and budget for its respective area to be included in the overall Operating Plan/Budget for the next three (3) calendar years in the form described in Section 4.2(a) above. If an Operating Plan/Budget is not approved by the JSC by [****] of a calendar year, then, until such time as an

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Operating Plan/Budget is either approved by the JSC or established pursuant to the dispute resolution procedure set forth in Section 17.1 below: (i) the preceding Operating Plan/Budget (including the Operating Forecast for the applicable period) shall continue to govern the Parties’ activities under this Agreement, (ii) each Party shall be permitted to conduct activities allocated to such Party in such preceding Operating Plan/Budget and incur costs consistent with such preceding Operating Plan/Budget, which costs shall be shared equally by the Parties in accordance with Section 7.12 below and the Financial Appendix, and (iii) in any case, without limiting the foregoing, each Party may continue any on-going trials initiated by such Party in accordance with such preceding Operating Plan/Budget, and the reasonable costs incurred by such Party in connection with such trials shall continue to be shared equally by the Parties in accordance with Section 7.12 below and the Financial Appendix; in each case, as if such costs were set forth in an approved Plan/Budget. [****]

(ii) [****]

(e) Operating Plan/Budget Content.

(i) In addition to the information described in Section 4.2(a) above, each Operating Plan/Budget shall designate responsibility and a reasonable timeline for completion for such activities.

(ii) The Operating Plan/Budget shall address: [****]

(iii) In addition, after receipt of the first Marketing Approval for a Product in the Territory, the Operating Plan/Budget shall include the requirements set out in Exhibit 4.2E hereto.

4.3 Exchange of Data and Know-How.

(a) By Either Party. During the term of this Agreement, each Party shall provide to the other Party all such Party’s Know-How (i.e., in case of La Jolla, La Jolla Know-How, and in the case of BioMarin CF, all BioMarin CF Know-How) that has not previously been provided hereunder, in each case promptly upon request by the other Party. The Party providing such Know-How shall provide the same in electronic form (to the extent the same exists in electronic form), and shall provide copies as reasonably requested and/or an opportunity for the other Party or its designee to inspect (and copy) all other materials comprising such Know-How (including for example, original patient report forms and other original source data). The Parties will cooperate and reasonably agree upon formats and procedures to facilitate the orderly and efficient exchange of the La Jolla Know-How and the BioMarin CF Know-How. Except as specifically provided in this Agreement, La Jolla may not provide, disclose or sublicense any BioMarin CF Know-How to any Third Party, and may not use, any BioMarin CF Know-How for any purpose other than to perform its obligations and exercise its rights under this Agreement. For avoidance of doubt, La Jolla may not provide or sublicense any BioMarin CF Know-How to the Asia-Pacific Licensee in the Asia-Pacific Territory or use any BioMarin CF Know-How to develop and/or commercialize the Products in the Asia-Pacific Territory; provided, however, that the Parties agree that La Jolla shall have the

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right to provide the NDA, all correspondence with the FDA relating to the NDA, the MAA and all correspondence with the EMEA relating to the MAA, in each case relating to the Product being used in the ASPEN Study and/or any modifications to such Product included in such NDA and/or MAA, as approved by the FDA or EMEA, and/or any supplements to the foregoing (such Product including modifications thereto, the “Initial Product”), any other filings with the FDA or EMEA associated with the Initial Product, all manufacturing information, and all clinical, preclinical and technical Data relating to the Initial Product and all pharmacovigilance and safety information relating to the Initial Product to any Affiliate or Third Party partner for the Asia-Pacific Territory for purposes of manufacturing, developing and commercializing the Compound and Product in the Asia-Pacific Territory. Additionally, upon BioMarin CF’s prior written consent, which may be granted or withheld in BioMarin CF’s sole and absolute discretion, La Jolla may disclose other BioMarin CF Know-How or other information that would otherwise be restricted by this Agreement to an Asia-Pacific Licensee in the Asia-Pacific Territory. Except as specifically provided in this Agreement, BioMarin CF may not provide or disclose any La Jolla Know-How to any Third Party, and may not use any La Jolla Know-How for any purpose other than to perform its obligations and exercise its rights under this Agreement.

(b) Provision of Data to JSC. Upon request by the JSC, each Party shall promptly provide the JSC with summaries in reasonable detail of all Data generated or obtained in the course of such Party’s performance of activities under the Operating Plan/Budget.

4.4 Term of Ongoing Obligations. The Parties’ obligations under Sections 4.1, 4.3 and 6.2, La Jolla’s obligation to perform activities under the Operating Plan/Budget, and La Jolla’s supply and manufacturing obligations under Article 9 and Section 5.3 below, any further right of La Jolla to have FTEs included in any Operating Plan/Budget pursuant to Section 4.1(b), 6.1, 6.2 or any other provision of this Agreement, and any right of La Jolla to manufacture or supply Product to BioMarin CF for sale in the Territory pursuant to any provision of this Agreement, shall terminate eighteen (18) years after the Effective Date, unless La Jolla requests to extend such period in writing at least two (2) years prior to such date. Upon termination of such obligations, the Working Group and the JSC will terminate. However, each Party will continue to have an approval right with respect to matters specified to be decided by the JSC under this Agreement. In such event, if the Parties are unable to reach agreement on a matter specified in this Agreement to have been decided by the JSC, the matter shall be resolved as if it were a dispute of the JSC in accordance with Article 17 below.

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ARTICLE V

REGULATORY MATTERS

5.1 Regulatory Responsibilities. Unless otherwise agreed by the Parties:

(a) ASPEN Study and Dosing Study. La Jolla shall be responsible for filing, prosecuting, obtaining and maintaining, in its own name, all INDs, CTAs, and other regulatory filings with respect to the ASPEN Study and the Dosing Study.

(b) NDA Regulatory Responsibilities. La Jolla will make all necessary regulatory filings (including by way of amendment) for, and seek to obtain, an NDA for the Product currently under development, including filing a new NDA if agreed by the JSC or required by the FDA, in the United States in its own name. Promptly following the Full Participation Point and within thirty (30) days after such NDA is approved, La Jolla shall assign to BioMarin CF all of its rights, title and interest in and to such NDA. Notwithstanding the foregoing, BioMarin CF will have a co-lead role in connection with any negotiations with the FDA regarding labeling of the Products. Prior to the assignment of the NDA, La Jolla shall maintain the same and shall take such actions as are reasonably necessary to make available to BioMarin CF the benefits of such NDA to the extent required in connection with BioMarin CF’s activities under this Agreement. After the assignment, BioMarin CF will be responsible for any further regulatory matters involving the Products, and La Jolla will fully support and cooperate with BioMarin CF in connection with such activities.

(c) Other Regulatory Responsibilities. From and after the Full Participation Point, except as expressly provided in Section 5.1(a) and (b), BioMarin CF shall be responsible for filing, obtaining and maintaining, in its own name, all other INDs, Marketing Applications, Marketing Approvals and other regulatory filings related to the development and commercialization of Products within the Territory, provided that La Jolla will fully support and cooperate with BioMarin CF in connection with such activities to the extent requested by BioMarin CF. BioMarin CF shall also obtain any export approvals required by the FDA to import or export Products to any country within the Territory outside the United States. All such filings will be in the name of BioMarin CF, except where otherwise required by local law.

(d) Costs. Prior to the Full Participation Point, responsibility for the costs of preparing, filing, obtaining and maintaining regulatory filings and approvals, including INDs, the NDA, the MAA, and other Marketing Approvals, for Products within the Territory shall be paid by La Jolla. From and after the Full Participation Point, responsibility for the costs of filing, obtaining and maintaining regulatory filings and approvals, including INDs, NDAs, MAAs, and other Marketing Approvals, for Products within the Territory shall be shared equally by the Parties as provided in Section 7.12 and the Financial Appendix.

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5.2 Filings and Meetings with Regulatory Authorities.

(a) Regulatory Filings and Correspondence. The Party with responsibility for regulatory matters in a Major Market country (as described in Section 5.1(a), (b) and (c) above) shall provide the other Party’s representatives on the JSC with copies of all material regulatory filings (including Marketing Approvals) and all minutes of any material meetings, telephone conferences and/or discussions with the Regulatory Authority of such Major Market country, and shall promptly notify the other Party’s representatives on the JSC with respect to any material changes or material matters that may arise in connection with such regulatory filings, including Marketing Approvals, of a Product within such Major Market country. Each Party will provide the other Party with translations of such documents into English to the extent prepared or obtained for its own use.

(b) Regulatory Interactions. [****]

(c) Role of JSC. The JSC shall approve the overall strategy and positioning of all material meetings, submissions and filings for Products with FDA, EMEA and Regulatory Authorities of other Major Market countries prior to their conduct, submission or filing, based upon reasonably detailed reports and summaries of such meetings, submissions and filings presented to the JSC by the Party with primary responsibility for such meeting, submission or filing (as described in Sections 5.1(a), (b) and (c) above), and all such meetings, submissions and filings shall conform with the strategy approved by the JSC. In connection with such review, such Party shall promptly provide to the JSC such additional information regarding a proposed meeting, submission or filing as the other Party may reasonably request.

(d) Other Regulatory Matters. Each Party will promptly provide the other Party with copies of all material documents, information and correspondence received from a Regulatory Authority (including a written summary of any material communications in which such other Party did not participate) pertaining to Products within the Territory and, upon reasonable request, with copies of any other documents, reports and communications from or to any Regulatory Authority within the Territory relating to a Product or activities under this Agreement.

5.3 Regulatory Inspections. [****]

5.4 Audit Rights. Each Party shall have the right, during normal business hours, and no more than once per calendar year, with more frequent audits upon agreement of the Parties (such agreement not to be withheld unreasonably), to inspect and audit: (a) those portions of the facilities of each Party, or any of its Affiliates, Sublicensees, subcontractors and investigator sites used in the performance of the Operating Plan/Budget, the manufacturing of Product to be supplied pursuant to this Agreement, and/or commercialization activities within the Territory, to ascertain compliance with applicable laws and Marketing Approvals, including current Good Laboratory Practices, Good Clinical Practices and Good Manufacturing Practices (“GMP”), and conformance with the applicable specifications and quality assurance standards, provided that the inspecting Party shall on such occasions be accompanied by a representative of the other Party (and such other Party must

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reasonably cooperate in making its representative available for such purpose); and (b) any of the other Party’s documentation or its Affiliates’, Sublicensees’, subcontractors’ or investigators’ documentation relating to the Operating Plan/Budget, the manufacturing of Product to be supplied pursuant to this Agreement, and/or commercialization activities within the Territory, including, to the extent permitted by law and any applicable privacy policies, the medical records of any patient participating in any clinical study under the Operating Plan/Budget. Notwithstanding the foregoing, in the event that BioMarin CF’s GMP compliance group determines that an audit is appropriate due to any issue relating to manufacturing, testing or other aspects of GMP compliance then BioMarin CF shall have the right to require additional audits of La Jolla, its Affiliates, Sublicensees, subcontractor and investigation sites until all such issues have been resolved. In addition, a Party’s audit right shall be limited by bona fide Third Party agreements or confidentiality obligations, provided, however, that each Party shall use its reasonable efforts to: (i) obtain audit rights for the other Party under such agreements; but (ii) cannot guarantee such other Party is granted audit rights to the same extent which a Party has audit rights in any agreements executed after the Effective Date; and if a Party is unable to obtain such audit rights for the other Party, then upon request it shall exercise its own rights with respect to such an audit for the benefit of the other Party.

5.5 Adverse Event Management.

(a) [****]

(b) [****].

(c) [****]

(d) [****]

ARTICLE VI

COMMERCIALIZATION AND PROMOTION

6.1 Commercialization.

(a) General. From and after the Full Participation Point, La Jolla and BioMarin CF shall each use diligent efforts to implement the commercialization activities under the Operating Plan/Budget described below with respect to each Product in a prompt and expeditious manner, and in a manner designed to achieve commercial success of such Products in each Major Market and for such other countries within the Territory as may be commercially reasonable.

(b) Territorial Allocation. In the United States, the Parties will jointly commercialize the Products as more fully described below, and in other countries of the Territory, BioMarin CF will be exclusively responsible for commercialization of the Products; in each case in accordance with the Operating Plan/Budget then in effect and subject to the oversight of the JSC.

(i) United States. In the United States, the Parties will be jointly responsible for the marketing activities outlined on Exhibit 6.1B hereto, and La Jolla shall have the

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right to provide fifty percent (50%) of the total number of FTEs allocated to the performance of such activities in the Operating Plan/Budget. In addition, La Jolla will have the right to deploy Sales Representatives detailing Products pursuant to Section 6.2 below and shall be afforded the opportunity to have input on the other major elements relating to marketing the Product. Subject to the foregoing, BioMarin CF shall have primary responsibility for other aspects of marketing and commercializing Products in the United States.

(ii) Countries of the Territory Outside the Unites States. In countries of the Territory outside the United States, BioMarin CF shall be exclusively responsible for performing all activities for the marketing, promotion, distribution and other commercialization of the Products, except as the JSC may otherwise determine is in the best interests of a Product, in accordance with the Operating Plan/Budget and the terms of this Agreement.

(iii) Promotion of the Products. [****]

(iv) Activities Prior to Full Participation Point. Notwithstanding the foregoing, prior to the Full Participation Point, except as the Parties may otherwise agree, La Jolla shall conduct any commercialization activities to be conducted with respect to the Products for all or any portion of the Territory at La Jolla’s sole expense.

6.2 La Jolla’s Sales Force Deployment Option.

(a) Exercise of Option. La Jolla shall have the right to deploy a portion of the total number of Sales Representatives for the Products in the United States (“Sales Force Deployment Option”) in accordance with this Section 6.2. To exercise the Sales Force Deployment Option, La Jolla shall notify BioMarin CF in writing no later than [****] after La Jolla’s receipt of the 128 Flare Topline Data as described in Section 7.6(e) below or earlier completion of the efficacy portion of the ASPEN Study. La Jolla shall only have the right to exercise the Sales Force Deployment Option once.

(i) La Jolla FTEs. If La Jolla exercises the Sales Force Deployment Option, La Jolla shall have the right to deploy up to [****]. Following La Jolla’s exercise of the Sales Force Deployment Option, La Jolla shall have the right and obligation to deploy toward the promotion of the Products in the United States the number of Sales Representatives specified in its notice of exercise. If La Jolla exercises its Sales Force Deployment Option within the time period specified in subparagraph (a), and the JSC determines to increase the total number of Sales Representatives that will promote Products in the United States from the number of such Sales Representatives allocated to such activities in the Operating Plan/Budget for the initial launch, La Jolla may increase the number of Sales Representatives that will promote the Products in the United States to maintain the same percentage of deployment as established through the exercise of the Sales Deployment Option by providing a notice to BioMarin CF in writing no later than thirty (30) days after such JSC determination. In the event that the JSC determines to reduce the total number of Sales Representatives that will promote the Products in the United States, such reduction shall be made proportionally between BioMarin CF and La Jolla Sales Representatives. For purposes of this Section 6.2(a)(i), [****]

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(ii) Sales Activities. It is understood that the Sales Representatives to be deployed by La Jolla shall be deployed in a manner to ensure geographic dispersion of, and reasonable access to major metropolitan areas by such La Jolla Sales Representatives. Other than the personnel to be so deployed and details to be performed by La Jolla, BioMarin CF shall be responsible for the remaining promotional effort for the Products in the United States in accordance with the Joint Promotion Plan established in accordance with Section 6.2(c) below.

(b) Role of the Joint Steering Committee. The JSC shall be responsible for coordinating the joint promotional activities of the Parties within the United States in the event La Jolla exercises the Sales Force Deployment Option.

(c) Joint Promotion Plan. After La Jolla has exercised the Sales Force Deployment Option and promptly following request by either Party, the Working Group shall prepare an operating plan for joint promotion of the Products in the United States (“Joint Promotion Plan”), which shall be reviewed and approved by the JSC. The Joint Promotion Plan shall set out in reasonable detail: (i) overall strategies with respect to promoting and marketing the Products in the U.S.; (ii) the activities to be conducted and the responsibilities of each Party in connection with the promotion of the Products in the U.S.; (iii) the reach, frequency, deployment and call plan for the Sales Representatives promoting the Products in the U.S.; and (iv) a fair and reasonable allocation between BioMarin CF and La Jolla of activities under such Joint Promotion Plan in the U.S., consistent with Section 6.2(a) above, including a reasonable allocation of promotion responsibilities for channels and key opinion leaders. Further, the Joint Promotion Plan shall provide at all times for an equivalent allocation of resources between the Sales Representatives of each of BioMarin CF and La Jolla, including with respect to marketing tools, programs, corporate accounts and medical affairs support, and shall provide for reasonable consistency from period to period in the responsibilities allocated to each Party. After establishment of the initial Joint Promotion Plan, the JSC shall review the Joint Promotion Plan on an ongoing basis and in no event less frequently than once each calendar half-year. The Working Group may propose revisions to the then-current Joint Promotion Plan to the JSC; provided however that that Joint Promotion Plan in effect for any year shall not be materially modified except as approved by the JSC.

(d) Performance Standards. BioMarin CF, and to the extent La Jolla has exercised the Sales Force Deployment Option, La Jolla will promote, market, and sell the Products in accordance with any requirements of the Regulatory Authorities and the reasonable requirements and instructions of the JSC and BioMarin CF, consistent with the Joint Promotion Plan, as such may be amended from time to time. Each Party will use commercially reasonable efforts to promote, maintain, and extend the sale of the Products in the U.S. that will reflect favorably on the other Party’s name, the Product Trademarks, and the quality of the Products. Neither Party will make any representations, nor give any warranty or guarantee to any Third Party in relation to the Products other than as approved by the JSC in writing. At all times, each Party will conduct its business in an ethical and business-like manner and in such a way as to uphold the good name and reputation of the other Party and the Products. Each Party will ensure that all regulations and requirements relating to the distribution, sale, and commercialization of the Products in the U.S. are complied with, as they relate to such Party’s activities hereunder.

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(e) BioMarin CF Practices and Procedures. After La Jolla has exercised the Sales Force Deployment Option, La Jolla agrees to comply promptly with the reasonable policies and directives with regard to the promotion of the Products in the United States issued by BioMarin CF from time to time; provided that such policies and procedures are equally applicable to BioMarin CF and its Sales Representatives and do not otherwise conflict with the terms of this Agreement. BioMarin CF shall notify La Jolla of such policies or directives and any changes thereto in writing a reasonable period prior to the implementation of such policies or directives, or any changes thereto. If La Jolla exercises the Sales Force Deployment Option, La Jolla shall, as an essential part of its commitment under this Agreement, use diligent efforts to cause its Sales Representatives to perform such tasks or activities for the promotion of the Products in the United States as specified in any Operating Plan/Budget.

(f) Sales Efforts; Costs.

(i) Sales Efforts of the Parties. The Joint Promotion Plan for each calendar year shall specify the number of Sales Representatives to be deployed by each Party for such calendar year, consistent with the parameters set forth in Section 6.2(a)(i) above.

(ii) Costs. If La Jolla exercises its Sales Force Deployment Option, then for purposes of Section 7.12 below and the Financial Appendix, the costs of the Parties’ Sales Representatives promoting the Products in the United States shall be determined on a modified FTE basis, as follows: [****]

(iii) Sales Representative Compensation Weighting. [****]

(g) Timing. La Jolla and BioMarin CF shall cooperate to have the Sales Representatives of both Parties hired and trained prior to the commencement of their joint promotion activities. To the extent that either Party hires and trains additional Sales Representatives for such purposes, it is understood that reimbursement of such Sales Representatives in accordance with the Financial Appendix will commence as of such Sales Representative’s date of hire. The timing of hiring the Sales Representatives shall be determined by the JSC and, to the extent practical, shall be done in order to have the Sales Representatives of each Party hired and trained prior to the launch of the first Product in the United States and such hiring and training of Sales Representatives shall be conducted by BioMarin CF and La Jolla in parallel (i.e., at approximately the same time prior to launch).

6.3 Right to Seek to Change Structure to Royalties on Net Sales. [****]

6.4 Booking Sales. It is understood that, during the term of this Agreement, as between the Parties, BioMarin CF will book all sales for Product in each country of the Territory.

6.5 Commercialization Activities Outside the Territory. La Jolla shall keep the JSC reasonably informed as to the progress of its launch and commercialization activities relating to the Product in the Asia-Pacific Territory, to the extent La Jolla has the right to do so, including with respect to pricing, by way of updates to the JSC at least annually and as otherwise reasonably requested by the JSC.

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ARTICLE VII

PAYMENTS

7.1 Commencement Payments.

(a) Within fifteen (15) days following the Effective Date:

(i) BioMarin CF shall pay to La Jolla Seven Million Five Hundred Thousand Dollars ($7,500,000); and

(ii) BioMarin CF shall purchase Seven Million Five Hundred Thousand Dollars ($7,500,000) worth of Series B Preferred Stock of La Jolla pursuant to the terms of the Securities Purchase Agreement at a price per common share equivalent (based on the conversion ratio provided for in the Certificate of Designations attached as an exhibit to the Securities Purchase Agreement) that represents a twenty percent (20%) premium over the average closing price of the Common Stock of La Jolla, as reported on the NASDAQ stock market, for the twenty (20) trading days ending on the day prior to the Effective Date.

7.2 Payments in Connection with First Interim Efficacy Analysis.

(a) Upon BioMarin CF’s receipt of a Completion Notice of the occurrence of the First Interim Efficacy Analysis and a Non-Futile Determination, BioMarin CF shall pay to La Jolla Fifteen Million Dollars ($15,000,000) within thirty (30) days.

(b) If the Completion Notice with respect to the occurrence of the First Interim Efficacy Analysis is accompanied by notice of a Futile Determination, then BioMarin CF shall have no further payment obligation to La Jolla under Sections 7.2, 7.3 and 7.4 and Section 7.13 shall thereafter apply to the continuing rights and obligations of the Parties under this Agreement.

(c) If the Completion Notice with respect to the occurrence of the First Interim Efficacy Analysis is accompanied by a notice of a P-Value Achievement, subject to Section 7.18, BioMarin CF shall have thirty (30) days to pay to La Jolla Forty-Seven Million Five Hundred Thousand Dollars ($47,500,000), Seven Million Five Hundred Thousand Dollars ($7,500,000) of which may be paid at BioMarin CF’s election in the form of an equity investment in La Jolla in accordance with Section 7.5.

7.3 Payments in Connection with Second Interim Efficacy Analysis.

(a) If BioMarin CF maintained its right to effect the Full Participation Point after the occurrence of the First Interim Efficacy Analysis by paying to La Jolla Fifteen Million Dollars ($15,000,000) in accordance with Section 7.2(a) of this Agreement, then within thirty (30) days of BioMarin CF’s receipt of a Completion Notice of the occurrence of the Second Interim Efficacy Analysis and:

(i) a P-Value Achievement, subject to Section 7.18, BioMarin CF shall pay to La Jolla Fifty-Five Million Dollars ($55,000,000), up to Ten Million Dollars ($10,000,000) of which may be paid at BioMarin CF’s election in the form of an equity investment in La Jolla in accordance with Section 7.5; or

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(ii) a Non-Futile Determination, subject to Section 7.18, BioMarin CF may (x) maintain its right to effect the Full Participation Point by paying to La Jolla Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000), up to Five Million Dollars ($5,000,000) of which may be paid at BioMarin CF’s election in the form of any equity investment in La Jolla in accordance with Section 7.5, or (y) effect the Full Participation Point by paying to La Jolla Fifteen Million Dollars ($15,000,000), up to Five Million Dollars ($5,000,000) of which may be paid at BioMarin CF’s election in the form of an equity investment in La Jolla in accordance with Section 7.5.

(b) If the Completion Notice with respect to the occurrence of the Second Interim Efficacy Analysis is accompanied by a Futile Determination, then BioMarin CF shall have no further payment obligation to La Jolla under Sections 7.3 and 7.4 and Section 7.13 shall thereafter apply to the continuing rights and obligations of the Parties under this Agreement.

7.4 Payment in Connection with 128 Flare Topline Data.

(a) If BioMarin CF effected the Full Participation Point after the occurrence of the Second Interim Efficacy Analysis in accordance with Section 7.3(b)(ii)(y) of this Agreement, then within thirty (30) days of BioMarin CF’s receipt of the Completion Notice relating to La Jolla’s receipt of the 128 Flare Topline Data and a P-Value Achievement, BioMarin CF shall pay to La Jolla Thirty Million Dollars ($30,000,000).

(b) If BioMarin CF maintained its right to effect the Full Participation Point after the occurrence of both the First Interim Efficacy Analysis in accordance with Section 7.2(a) and the Second Interim Efficacy Analysis in accordance with Section 7.3(a)(ii)(x) of this Agreement, then within thirty (30) days of BioMarin CF’s receipt of the Completion Notice relating to La Jolla’s receipt of the 128 Flare Topline Data and a P-Value Achievement, subject to Section 7.18, BioMarin CF shall pay to La Jolla Fifty-Five Million Dollars ($55,000,000), up to Fifteen Million Dollars ($15,000,000) of which may be paid at BioMarin CF’s election in the form of an equity investment in La Jolla in accordance with Section 7.5.

(c) If the Completion Notice provided to BioMarin CF with respect to the 128 Flare Topline Data indicates that the P-Value Achievement has not occurred, then BioMarin CF shall have no further payment obligation to La Jolla under Section 7.4 and Section 7.13 shall thereafter apply to the continuing rights and obligations of the Parties under this Agreement.

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7.5 Partial Payments in Equity. To the extent that BioMarin CF elects to make a portion of any payments due to La Jolla in the form of an equity purchase as permitted under Sections 7.2, 7.3, or 7.4, then such equity investment shall be made pursuant to the terms of the Securities Purchase Agreement at a price per common share equivalent (based on the conversion ratio provided for in the Certificate of Designations attached as an exhibit to the Securities Purchase Agreement) equal to one hundred ten percent (110%) of the average closing price of the Common Stock of La Jolla, as reported on the NASDAQ stock market or such other reporting service as the stock is then quoted if not then quoted on NASDAQ (and if not then traded at the value determined by an investment bank selected consistent with the provisions of Section 14.3), for the ten (10) trading days commencing five (5) trading days immediately prior to the date La Jolla has publicly announced the event that triggered such payment (i.e., the P-Value Achievement, or in the case of such payment where there is no P-Value Achievement, La Jolla’s first public announcement of the results of the Second Interim Efficacy Analysis or the first public announcement of the approval of an NDA for the Product under Section 7.13). To effect the election to make such payments in the form of equity, BioMarin CF shall so notify La Jolla in writing within fifteen (15) days after receiving the Completion Notice that triggered such payment, specifying the amount of the payment relating to the Full Participation Point that BioMarin CF so elects to make in the form of such equity purchase (“Equity Election Notice”). All equity purchases pursuant to this Section 7.5 shall be subject to the provisions of Section 7.18.

7.6 Certain Terms. For purposes of the payments under this Section 7:

(a) “Data Monitoring Board” shall mean the expert advisory group appointed for the 90-14 portion of the ASPEN Study in accordance with the charter for such advisory group and which is charged with the responsibility, among other matters, of reviewing the results of the Interim Efficacy Analyses and making a recommendation in accordance with the protocol for the ASPEN Study based on the safety profile and the outcome of each Interim Efficacy Analysis as to whether La Jolla should continue to conduct the 90-14 portion of the ASPEN Study.

(b) “Non-Futile Determination” shall mean a recommendation by the Data Monitoring Board following the First Interim Efficacy Analysis or the Second Interim Efficacy Analysis, as applicable, as to the continuation of the 90-14 portion of the ASPEN Study other than (i) a recommendation that such continuation “may be futile” (as specified in Paragraph 7.1.2 of the Interim Analysis Plan for the 90-14 portion of the ASPEN Study), or (ii) P-Value Achievement has occurred; and “Futile Determination” shall mean a recommendation by the Data Monitoring Board following the First Interim Efficacy Analysis or the Second Interim Efficacy Analysis, as applicable, that the 90-14 portion of the ASPEN Study no longer has meaningful potential to meet its primary end point with statistical significance.

(c) “P-Value Achievement” shall mean: (A) in the case of the First Interim Efficacy Analysis or the Second Interim Efficacy Analysis, as applicable, the nominal p-value of the primary end point is less than 0.001; and (B) in the case of the analysis performed following La Jolla’s receipt of the 128 Flare Topline Data, the nominal p-value of the primary end point is less than 0.05.

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(d) “Renal Events Committee” shall mean the committee of independent experts appointed for the 90-14 portion of the ASPEN Study in accordance with the charter for such committee and which shall provide an expert assessment of the renal flare data obtained as a result of the conduct of the 90-14 portion of the ASPEN Study and a determination as to whether such renal flares are attributable to SLE prior to the data from the 90-14 portion of the ASPEN Study being unblinded.

(e) “128 Flare Topline Data” shall mean summarized data tables for the first one hundred twenty eight (128) events of renal flare adjudicated to be SLE-related accrued in the 90-14 portion of the ASPEN Study calculating the time-to-renal flare for patients in the placebo and the combined active treatment groups in the 90-14 portion of the ASPEN Study, respectively, together with the results of the sensitivity analysis performed pursuant to Section 4.3 of the Statistical Analysis Plan for the 90-14 portion of the ASPEN Study and summaries of adverse events observed in such patients through the date of such 128th renal flare.

7.7 Notice by La Jolla. La Jolla shall promptly notify BioMarin CF in writing following the occurrence of each of the following events: (i) the First Efficacy Analysis; (ii) the Second Efficacy Analysis; (iii) Non-Futile Determination; (iv) Futile Determination; (v) a P-Value Achievement; (vi) La Jolla’s receipt of the 128 Flare Topline Data; and (vii) receipt of recommendation from the Data Mentoring Board to terminate any portion of the 90-14 portion of the ASPEN Study for any reason. A “Completion Notice” shall be any such notice issued by La Jolla under this Section 7.7 notifying BioMarin CF of the occurrence of one or more of the events described in paragraphs (i) through (vii).

7.8 Termination.

(a) BioMarin CF shall have the right to terminate this Agreement at any time and for any reason upon thirty (30) days written notice to La Jolla under this Section 7.8(a) prior to the date BioMarin CF effects the Full Participation Point pursuant to this Article 7. In the event that BioMarin CF so terminates this Agreement under this Section 7.8(a), BioMarin CF shall not be obligated to make any further payments under Sections 7.2, 7.3, 7.4, 7.9 or 7.10 that become due or otherwise are to be paid after the date of such notice of termination. For example, if BioMarin CF provides a notice of termination under this Section 7.8(a) after receipt of a Completion Notice from La Jolla of a P-Value Achievement at the Second Interim Efficacy Analysis, but prior to the date on which the corresponding payment in respect of the Full Participation Point becomes due (i.e., thirty (30) days after such notice from La Jolla), then this Agreement shall terminate and such payment in respect of the Full Participation Point shall not be due. Notwithstanding the foregoing or Section 13.3 below, BioMarin CF shall not have the right to terminate this Agreement prior making a payment to La Jolla pursuant to Section 7.2, unless Sections 7.2(b) or 7.2(c) apply.

(b) If the ASPEN Study terminates or is abandoned by La Jolla for any reason and at such time of termination or abandonment neither a P-Value Achievement has occurred nor the 128 Flare Topline Data has been received by La Jolla, then (i) La Jolla shall promptly notify BioMarin CF of such results, (ii) no further payment shall be due from BioMarin CF to La Jolla under Sections 7.2, 7.3 and 7.4 and (iii) Section 7.13 shall thereafter apply to the continuing rights

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and obligations of the Parties under this Agreement; provided that if the ASPEN Study has terminated or been abandoned and at such time a Party is in breach of its obligations hereunder, the applicability of Section 7.13 shall not affect the rights and claims of one Party against the other under this Agreement relating to such breach. Any such notice provided by La Jolla to BioMarin CF under this Section 7.8(b) shall be deemed to be a Completion Notice for the purposes of Sections 7.13 and 13.4 below.

(c) Any termination of this Agreement under this Section 7.8 shall be deemed a termination under Section 13.3, for the purposes of Article 14 below.

7.9 Regulatory Milestones. On and after the Full Participation Point, BioMarin CF shall pay to La Jolla the milestone payments set out below following the first achievement of the corresponding regulatory milestone set out below in accordance with the payment provisions of this Article 7:

Regulatory Milestone	One Time Milestone Payment Amount
1. First receipt of an approval of an NDA for the Product in the ASPEN Study:
a.      if by such receipt La Jolla has completed a Positive Dosing Study	$	45,000,000
b.      if by such receipt La Jolla has not completed a Positive Dosing Study	$	30,000,000
c.      only in the circumstance that the P-Value Achievement occurs at the First Interim Efficacy Analysis or the Second Interim Efficacy Analysis and the Dosing Study is not complete at the time of approval of the NDA, if within one (1) year of such approval La Jolla completes a Positive Dosing Study	$	15,000,000
2. First receipt of an approval of an MAA (or Marketing Approval in all of the Major Markets other than the United States)	$	10,000,000

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7.10 Net Sales Milestones. In addition, BioMarin CF shall pay to La Jolla the milestone payments set out below following the first achievement of the corresponding milestone set out below, in accordance with the payment provisions in this Article 7:

Net Sales Milestone	One Time Milestone Payment Amount
1. First time that Annual Net Sales of Products within the Territory equal or exceed Two Hundred Fifty Million Dollars ($250,000,000)	$	13,500,000
2. First time that Annual Net Sales of Products within the Territory equal or exceed Five Hundred Million Dollars ($500,000,000)	$	25,000,000
3. First time that Annual Net Sales of Products within the Territory equal or exceed Seven Hundred Fifty Million Dollars ($750,000,000)	$	37,500,000
4. First time that Annual Net Sales of Products within the Territory equal or exceed One Billion Dollars ($1,000,000,000)	$	50,000,000

7.11 Milestone Reporting and Payments. BioMarin CF shall notify La Jolla in writing within thirty (30) days after the achievement of each milestone set out in Section 7.9 or 7.10, and each such notice shall be accompanied by the appropriate milestone payment. Any milestone payable by BioMarin CF pursuant to Section 7.9 or Section 7.10 shall be made no more than once with respect to the achievement of each milestone set out in Section 7.9 or Section 7.10, as applicable, and in no event shall the aggregate amount to be paid by BioMarin CF under: (a) Section 7.9 exceed Fifty-Five Million Dollars ($55,000,000); and (b) Section 7.10 exceed One Hundred Twenty-Six Million Dollars ($126,000,000).

7.12 Cost-Profit Sharing. On and from the Full Participation Point, except as otherwise provided in this Agreement or the Financial Appendix, BioMarin CF and La Jolla shall share equally: (a) Shared Costs related to the development and commercialization of Products within the Territory, and the manufacture of Products for use and sale, within the Territory; and (b) the Profit/Loss from sales of Products within the Territory; in each case as and to the extent set forth in the Financial Appendix. For such purposes, if the Full Participation Point is triggered by a P-Value Achievement, then such sharing of costs shall commence as of the date BioMarin CF received the Completion Notice for such P-Value Achievement. Prior to the Full Participation Point, La Jolla shall be responsible for all costs that it incurs in accordance with the Operating Plan/Budget. Additional terms related to determining Shared Costs and Profit/Loss, and to financial planning, accounting policies and procedures to be followed with respect to Products within the Territory are set forth in the Financial Appendix.

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7.13 Futile Determination or Failed P-Value Achievement.

(a) Adverse Outcome. [****]

(b) Rights Relating to Approval of the NDA without P-Value Achievement. [****]

7.14 Other Payment Terms.

(a) Payments Non-Refundable. For the avoidance of doubt, it is understood that the payments in Sections 7.1-7.4, 7.9 and 7.10 above shall not be refundable and shall not be creditable against future milestone payments or other payments by BioMarin CF to La Jolla under this Agreement, nor shall any such payments be taken into account in calculating the Parties’ sharing of costs and Profit/Loss pursuant to Section 7.12 and the Financial Appendix.

(b) Payment Method. All payments between the Parties under this Agreement (including the payments due under this Article 7 and the payments under the Financial Appendix) shall be made by bank wire transfer in immediately available funds to an account designated by the Party to which such payments are due. Any payments or portions thereof due under this Agreement that are not paid by the date such payments are due under this Agreement shall bear interest at a rate equal to: (i) the prime rate as reported by The Wall Street Journal (U.S. Western Edition), plus two percent (2%) per year; or (ii) if lower, the maximum rate permitted by law (the “Interest Rate”); calculated on the number of days such payment is delinquent, compounded annually and computed on the basis of a three hundred sixty five (365) day year. This Section 7.14(b) shall in no way limit any other remedies available to the Parties.

(c) Currency Conversion. Unless otherwise expressly stated in this Agreement, all dollars amounts in this Agreement are stated, and all payments under this Agreement shall be made, in United States Dollars. For any amounts invoiced or incurred in a currency other than United States Dollars, the amounts shall be expressed in the currency in which such sale was originally made, or in which such cost was incurred, together with the United States Dollar equivalent, calculated using the average exchange rate for the conversion of the applicable foreign currency into United States Dollars, quoted for current transactions for both buying and selling United States Dollars, as reported in The Wall Street Journal (U.S. Western Edition) (or any other publication as agreed to be the Parties) for all business days in the month in which transaction occurred.

7.15 Withholding Taxes. Any withholding or other taxes that either Party is required by law to withhold or pay on behalf of the other Party, with respect to any payments to such other Party under this Agreement, shall be deducted as required by law from such payment and shall be paid to the proper taxing authorities; provided that the withholding Party shall furnish to the other Party proper evidence of the taxes so paid. The Parties will exercise their reasonable efforts to ensure that any withholding taxes imposed are reduced as far as possible under the provisions of any applicable tax treaty, and shall cooperate in filing any forms required for such reduction. Notwithstanding the foregoing, BioMarin CF shall not make any deductions from any payments due La Jolla for any withholding taxes (and shall indemnify La Jolla against any such taxes) caused by the fact that BioMarin CF is not incorporated in, or a resident of, the United States.

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7.16 Books and Records. Each Party shall keep, and shall require its Affiliates, and Sublicensees to keep, complete, true and accurate books of account and records reasonably sufficient to determine and establish the amounts payable pursuant to this Agreement. Such books and records shall also document all costs and expenses incurred or paid and, if applicable to a Party, its Affiliates or Sublicensees, Gross Sales and Annual Net Sales of Products received in connection with this Agreement and the Financial Appendix, including such other information as reasonably necessary to verify the reports to be provided under the Financial Appendix. All such books and records shall be maintained until the later to occur of: (a) three (3) years following the relevant calendar year to which such records pertain; or (b) the expiration of the period required by applicable laws and regulations.

7.17 Audit Rights.

(a) Request. Upon the prior written notice of no less than [****] to a Party (the “Auditing Party”) and not more than once each calendar year, the other Party (the “Responding Party”) shall permit the Auditing Party, accompanied by an independent certified public accounting firm of nationally recognized standing, selected by the Auditing Party and reasonably acceptable to the Responding Party, to have access during normal business hours to the records of the Responding Party and its Affiliates as may be reasonably necessary to verify the accuracy of the financial reports and calculations made under this Article 7 and the Financial Appendix for any and all quarters [****]. Each Party shall require its Affiliates, and BioMarin CF shall use its reasonable efforts to obtain in its agreements with its Sublicensees, audit rights for the other Party, at least to the same extent as such Party has such rights in such agreements. To the extent that BioMarin CF does not have the right to grant to the other Party the right to audit its Sublicensees’ books and records hereunder, BioMarin CF shall obtain for itself such rights and, at the request of La Jolla, shall exercise such audit rights with respect to such Sublicensees and provide the results of such audit for inspection by La Jolla pursuant to this Section 7.17.

(b) Discrepancies. If, as a result of such audit, it is established that additional amounts were owed by the Responding Party for the audited period, such Party shall pay such additional amounts within [****] after the date such discrepancy is established. In the event of a dispute as to whether there is a discrepancy, the matter shall be resolved under and utilizing the dispute resolution provisions of Sections 17.2 and 17.3. The fees charged by such accounting firm shall be paid by the Auditing Party; provided, however, that if the audit establishes that the aggregate amounts payable by the Responding Party for the period covered by the audit are more than [****] of the aggregate amounts actually paid for such period, then the Responding Party shall pay the reasonable fees and expenses charged by such accounting firm.

7.18 Restriction on Certain Equity Investments. [****]

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ARTICLE VIII

CERTAIN COVENANTS

8.1 General Communications. Each Party shall keep the other Party fully and promptly informed as to its progress and activities relating to the development, commercialization, marketing and promotion of the Products within the Territory, including with respect to regulatory matters and meetings with Regulatory Authorities, by way of updates to the JSC at their meetings and as otherwise specified in this Agreement, or as reasonably requested by the other Party including providing the other Party promptly with all clinical and regulatory information, filings made prior to the Effective Date and all financial information and data related to its performance under the Agreement to the extent necessary for each Party, on a timely basis, to prepare its internal and external financial reports.

8.2 Conduct of Activities. Each Party shall conduct those activities allocated to such Party under the Operating Plan/Budget in compliance in all material respects with all applicable laws, rules and regulations and in accordance with good scientific and clinical practices, applicable under the laws and regulations of the country in which such activities are conducted.

ARTICLE IX

MANUFACTURING

9.1 Manufacturing.

(a) The Product will be manufactured in accordance with the Operating Plan/Budget adopted by the JSC. The JSC will, to the extent possible, in adopting each Operating Plan/Budget, direct that La Jolla’s existing facility as currently configured and with such improvements as are contemplated in the Initial Operating Plan/Budget be used to produce bulk Product on and subject to the terms described in Section 9.1(b). The JSC’s obligations under this Article 9 are subject to La Jolla’s facility maintaining all regulatory approvals and licenses necessary to manufacture the Products (including without limitation all manufacturing specifications) required by the FDA and the EMEA and for such facility to manufacture the Product at a Cost Effective Price, as defined below. If BioMarin CF does not obtain from La Jolla the right to sell Product in the Asia-Pacific Territory and La Jolla is not then producing any bulk Compound, then, at La Jolla’s request, BioMarin CF and La Jolla will negotiate a supply agreement for sale of Product meeting the specifications approved by either the EMEA or FDA (with such changes as are reasonably agreed, provided that La Jolla or the Asia-Pacific Licensee will be responsible for all costs associated with such changes) to La Jolla for the Asia-Pacific Territory on terms and conditions that are commercially reasonable and consistent with terms prevailing between suppliers and distributors in the industry; provided that the pricing terms will be subject to Section 9.3. For purposes of this Article 9, [****]

(b) [****]

9.2 Funding for La Jolla Facility. [****]

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9.3 Cooperation. BioMarin CF shall cooperate fully with La Jolla to enable La Jolla to purchase raw materials, Compound and/or Product, for the Asia-Pacific Territory, directly from BioMarin CF’s vendors on the same terms (including pricing) as BioMarin CF. In addition, to the extent that BioMarin CF produces such items itself or La Jolla is unable to obtain such items directly from BioMarin CF’s vendors on the same terms as BioMarin CF, then BioMarin CF shall supply such items to La Jolla, in accordance with such procedures and specifications as are applicable to La Jolla’s supply to BioMarin CF under Section 9.1 above on a reciprocal basis (and to the extent such procedures or specifications are not applicable, on reasonable and customary terms).

(a) Materials Produced by Third Party Contractors. [****]

(b) Materials Produced by BioMarin CF. To the extent BioMarin CF manufactures such raw materials, Compound or Product itself, and supplies the same to La Jolla under this Section 9.3, then La Jolla shall reimburse BioMarin CF the Manufacturing Cost of such items.

9.4 Shortage of Supply. [****]

(a) Procedures. If at any time La Jolla or BioMarin CF (the “Producing Party”) becomes unable to supply the quantities of Compound or Product that such Producing Party is committed to supply hereunder, it shall immediately notify the other Party in writing. In such event, the JSC shall immediately convene to address the problem, including locating alternative suppliers and facilities to increase production and identifying other actions necessary to resolve the problem. Based on such interactions, the JSC shall reasonably establish appropriate measures to remedy the shortage and the Parties shall promptly implement such measures. In any event, both Parties agree to respond with the level of speed and diligence commensurate with the severity of the problem.

(b) Allocation. [****].

9.5 BioMarin CF Manufacturing. In the event that BioMarin CF manufactures the Compound, Product, any intermediate or raw material, such manufacturing shall be at a Cost Effective Price.

9.6 Restrictions on Manufacturing Locations. [****]

ARTICLE X

CONFIDENTIALITY

10.1 Confidential Information. Except as expressly provided in this Agreement or otherwise agreed in writing, the Parties agree that the receiving Party shall keep confidential and shall not publish or otherwise disclose or use for any purpose any information and other confidential and proprietary materials furnished to it or its respective agents or representatives by the other Party or its respective agents or representatives hereto pursuant to this Agreement (collectively, “Confidential Information”). Notwithstanding the foregoing, the obligations of non-use and

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non-disclosure set forth in this Article 10 shall not apply to the extent that the receiving Party can establish that any Confidential Information:

(a) was already known to the receiving Party, other than under an obligation of confidentiality remaining in effect, at the time of disclosure, as evidenced by written records kept in the ordinary course of business of the receiving Party;

(b) was generally available to the public or otherwise part of the public domain at the time of its disclosure to the receiving Party;

(c) became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving Party in breach of this Agreement;

(d) was subsequently lawfully disclosed to the receiving Party by a Third Party, who had no obligation to the disclosing Party not to disclose such information to others; or

(e) was independently developed by the receiving Party prior to its disclosure by the disclosing Party and without use of or reference to any Confidential Information disclosed by the disclosing Party, as evidenced by written records kept in the ordinary course of business of the receiving Party.

10.2 Permitted Disclosures. Notwithstanding the provisions of Section 10.1 above and subject to Sections 10.3 and 10.4 below, each Party may use and disclose the other Party’s Confidential Information as follows: (a) under appropriate confidentiality obligations substantially equivalent to those in this Agreement, to its Affiliates, licensees, permitted Sublicensees, contractors and any other Third Parties to the extent such use and/or disclosure is necessary or reasonably useful to perform its obligations or to exercise the rights granted to it, or reserved by it, under this Agreement (including to grant licenses or permitted Sublicenses hereunder, and in the case of La Jolla, to develop, manufacture and commercialize Products for use in the Asia-Pacific Territory); or (b) to the extent such disclosure is reasonably necessary in filing or prosecuting intellectual property applications, complying with the terms of licenses from Third Parties, prosecuting or defending litigation, complying with applicable governmental laws or regulations, obtaining Marketing Approval, conducting clinical trials hereunder with respect to a Product, or submitting information to tax or other governmental authorities. If a Party is required by law or regulations (including securities laws, regulations or guidances) to make any such disclosure of the other Party’s Confidential Information, to the extent it may legally do so, it will give reasonable advance notice to the other Party of such disclosure requirement and, save to the extent inappropriate in the case of patent applications or otherwise, will use its good faith efforts to secure confidential treatment of such Confidential Information prior to its disclosure (whether through protective orders or otherwise). For any other disclosures of the other Party’s Confidential Information, including to Affiliates, licensees, permitted Sublicensees, contractors and other Third Parties, a Party shall ensure that the recipient thereof is bound by a written confidentiality agreement as materially protective of such Confidential Information as this Article 10.

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10.3 Confidential Terms. Each Party agrees not to disclose to any Third Party the terms of this Agreement without the prior written consent of the other Party hereto, except each Party may disclose the terms of this Agreement: (a) to advisors (including financial advisors, attorneys and accountants), actual or potential acquisition partners or private investors, and others on a need to know basis, in each case under appropriate confidentiality provisions substantially equivalent to those in this Agreement; or (b) to the extent necessary to comply with applicable laws and court orders (including securities laws, regulations or guidances); provided that in the case of paragraph (b), the disclosing Party shall promptly notify the other Party and (other than in the case where such disclosure is necessary, in the reasonable opinion of the disclosing Party’s legal counsel, to comply with securities laws, regulations or guidances) allow the other Party a reasonable opportunity to oppose with the body initiating the process and, to the extent allowable by law, to seek limitations on the portion of the Agreement that is required to be disclosed.

10.4 Publication of Product Information. Prior to the first Marketing Approval for the first Product in the Territory, before publishing, publicly presenting and/or submitting for written or oral publication a manuscript, abstract or the like that includes Data or other information generated under this Agreement relating to the Compound or a Product that has not previously published pursuant to this Section 10.4 (each, a “Publication”), the Party proposing such Publication shall provide the other Party a copy thereof for its review for at least thirty (30) days or such shorter period as is reasonably practicable (unless such Party is required by law to publish such information sooner). Such Party shall consider in good faith any comments provided by the other Party during such period. After such first Marketing Approval, the JSC will develop procedures for reviewing and approving Publications, which procedures shall be consistent with the foregoing and shall permit any public disclosure as is required by law. The contribution of each Party shall be noted in all Publications by acknowledgment or co-authorship, whichever is appropriate.

10.5 Press Releases and Announcements.

(a) Initial Release. On the Effective Date or, if mutually agreed, promptly after the Effective Date, the Parties shall issue a joint press release to announce the execution of this Agreement and the relationship of the Parties. Such press release will include a description of the aggregate financial terms of the Agreement.

(b) Further Publicity. The Parties acknowledge the importance of supporting each other’s efforts to publicly disclose results and significant developments regarding the Products within the Territory and other activities in connection with this Agreement in the Territory that may include information that is not otherwise permitted to be disclosed under this Article 10, and that may be beyond what is required by law. The JSC shall develop a plan for the coordination, review and sign off by each Party of public disclosure of information relating to the Product. Each Party shall adhere to such disclosure plan, provided that each Party shall be free to make such public disclosures as it deems necessary to comply with all applicable law, rules and regulations.

(c) Certain Events. In the event this Agreement terminates under Section 13.3 or 7.8, neither Party shall make any disparaging comments about the other Party but shall otherwise be free to make such statements as such Party believes appropriate or necessary.

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10.6 Prior Non-Disclosure Agreements. Upon execution of this Agreement, the terms of this Article 10 shall supersede any prior non-disclosure, secrecy or confidentiality agreement between the Parties, including that certain nondisclosure agreement between the Parties dated January 15, 2008 (the “Prior Agreement”). Any information disclosed under such prior agreements shall be deemed disclosed under this Agreement.

ARTICLE XI

INTELLECTUAL PROPERTY

11.1 Inventions and Other Intellectual Property.

(a) General Principles. Title to all inventions and other intellectual property conceived or created solely by BioMarin CF personnel in connection with this Agreement (and all intellectual property rights therein) shall be owned by BioMarin CF. Title to all inventions and other intellectual property conceived or created solely by La Jolla personnel in connection with this Agreement (and all intellectual property rights therein) shall be owned by La Jolla. Title to all inventions and other intellectual property conceived or created jointly by personnel of La Jolla and BioMarin CF in connection with this Agreement (and all intellectual property rights therein) shall be jointly owned by La Jolla and BioMarin CF.

(b) Joint Ownership. Except as expressly provided in this Agreement, it is understood that neither Party shall have any obligation to obtain any approval of, nor pay a share of the proceeds to, the other Party to practice, enforce, license, assign or otherwise exploit inventions or intellectual property owned jointly by the Parties, and each Party hereby waives any right it may have under the laws of any jurisdiction to require such approval or accounting. Each Party agrees to cooperate with the other Party, as reasonably requested, and to take such actions as may be required to give effect to this Section 11.1(b) in a particular country within or outside the Territory.

(c) Grant-Back License. BioMarin CF hereby grants to La Jolla a non-exclusive, non-transferable (except pursuant to Section 18.8 below), royalty-free, limited license (without the right to sublicense except in connection with an Asia-Pacific License, which shall be subject to Section 4.3) to use any BioMarin CF Improvements solely to: (i) make and have made and import the Products for BioMarin CF as authorized by the JSC or for use and sale outside the Territory, (ii) to use any BioMarin CF Improvements for development purposes as provided in Article 4 or in connection with an Asia-Pacific License, and sell or offer for sale the Products as provided in Article 6 during the term of this Agreement within the Territory or (iii) to develop, use, sell, offer for sale and otherwise commercialize the Compound or Products in the Asia-Pacific Territory; provided that, as applied to the Asia-Pacific Territory, such right to sublicense to an Asia-Pacific Licensee shall only apply to BioMarin CF Improvements relating to the Initial Product. As used herein, “BioMarin CF Improvements” means any inventions or intellectual property (including Data and know-how) (and all intellectual property rights) that is: (a) owned, licensed to, or acquired by, BioMarin CF and, as directed by the JSC or BioMarin CF, is applied to the development, use, manufacture and/or commercialization of any Compound or any Product under this Agreement, including but not limited to, (i) a modification or derivative of the Compound, or an intermediate thereof, or (ii) a method of synthesis or manufacture of the Compound, or any biologically active materials, or an intermediate

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or by-product used or created in such synthesis or manufacture, or (b) made solely by BioMarin CF using Confidential Information of La Jolla; and any Patent claiming or disclosing such an invention or intellectual property. As used herein, “La Jolla Improvements” means any inventions or intellectual property (including Data and know-how) (and all intellectual property rights) made solely by or under authority of, or is acquired by, La Jolla using Confidential Information of BioMarin CF, and any Patent claiming or disclosing such an invention or intellectual property. To the extent any La Jolla Improvements do not fall within the definition of La Jolla Know-How or La Jolla Patents, La Jolla hereby grants to BioMarin CF a license to La Jolla Improvements commensurate in scope as provided in Section 2.1.

11.2 Prosecution and Maintenance of Patents.

(a) Control of Prosecution Prior to Full Participation. As between the Parties and prior to the Full Participation Point, La Jolla shall control the Prosecution and Maintenance of all La Jolla Patents in the Territory and all Joint Patents (both within and outside the Territory) in consultation with BioMarin CF using counsel selected by La Jolla and reasonably acceptable to BioMarin CF. La Jolla agrees to: (i) keep BioMarin CF fully informed with respect to the status of Prosecution and Maintenance of such La Jolla Patents and Joint Patents; and (ii) consult in good faith with BioMarin CF regarding the Prosecution and Maintenance of such La Jolla Patents and Joint Patents, including providing copies of all material communications to and from the patent offices, including without limitation, office actions, responses to office actions, notices of allowance, and notices of issuance, and providing BioMarin CF a reasonable opportunity to review and comment on any responses to office actions and claim amendments prior to filing. If La Jolla determines not to file any Patent, or to abandon any Patent, that is: (A) within the La Jolla Patents in any country of the Territory; or (B) within the Joint Patents in any country within or outside the Territory, as applicable; then La Jolla shall provide BioMarin CF with written notice of such decision at least sixty (60) days (or if a shorter period is afforded to La Jolla to make such decision, as soon as possible) prior to the deadline for filing any such Patent or the date on which such abandonment would become effective, as applicable. In such event, BioMarin CF shall have the right, at its option and cost, to control the Prosecution and Maintenance of such La Jolla Patent or such Joint Patent, as applicable, and keep La Jolla reasonably informed of BioMarin CF’s activities with respect to such Prosecution and Maintenance.

(b) Control of Prosecution After Full Participation. On and after the Full Participation Point, BioMarin CF shall control the Prosecution and Maintenance of all La Jolla Patents in the Territory and all Joint Patents (both within and outside the Territory) in consultation with La Jolla, including matters then existing that arose prior to the Full Participation Point, using counsel selected by BioMarin CF and reasonably acceptable to La Jolla. BioMarin CF agrees to: (i) keep La Jolla fully informed with respect to the Prosecution and Maintenance of such La Jolla Patents and Joint Patents; and (ii) consult in good faith with La Jolla regarding the Prosecution and Maintenance of such La Jolla Patents and Joint Patents, including providing copies of all material communications to and from the patent offices, including without limitation, office actions, responses to office actions, notices of allowance, and notices of issuance, and providing La Jolla a reasonable opportunity to review and comment on any responses to office actions and claim

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amendments prior to filing. If BioMarin CF determines not to file any Patent, or to abandon any Patent, that is: (A) within the La Jolla Patents in any country of the Territory; or (B) within the Joint Patents in any country within or outside the Territory, as applicable; then BioMarin CF shall provide La Jolla with written notice of such decision at least sixty (60) days (or if a shorter period is afforded to BioMarin CF to make such decision, as soon as possible) prior to the deadline for filing any such Patent or the date on which such abandonment would become effective, as applicable. In such event, La Jolla shall have the right, at its option and cost, to control the Prosecution and Maintenance of such La Jolla Patent or such Joint Patent, as applicable, and keep BioMarin CF reasonably informed of La Jolla’s activities with respect to such Prosecution and Maintenance.

(c) Scope of Activities. For the purposes of this Section 11.2, “Prosecution and Maintenance” (including variations such as “Prosecute and Maintain”) shall mean, with respect to a Patent, the preparing, filing, prosecuting and maintenance of such Patent, as well as continuations, divisionals, continuations-in-part, re-examinations, reissues and requests for Patent term extensions and the like with respect to such Patent, together with the conduct of interferences, the defense of oppositions and other similar proceedings with respect to a Patent. Notwithstanding Sections 11.2(a) and (b) above, BioMarin CF shall not have the right to conduct or control the Prosecution and Maintenance of La Jolla Patents if such Patents (or the claims thereof) are not directed or related to the Compound, a Product and/or in each case the manufacture or use thereof.

(d) Cooperation. Each Party shall cooperate with the other Party in connection with all activities relating to the Prosecution and Maintenance of the La Jolla Patents and Joint Patents undertaken by such other Party pursuant to this Section 11.2, including: (i) making available in a timely manner any documents or information such other Party reasonably requests to facilitate such other Party’s Prosecution and Maintenance of the La Jolla Patents and/or Joint Patents, as applicable, pursuant to this Section 11.2; and (ii) if and as appropriate, signing (or causing to have signed) all documents relating to the prosecution and maintenance of any La Jolla Patents and/or Joint Patents by such other Party; and (iii) signing any power of attorney required to enable the other Party to Prosecute and Maintain the La Jolla Patents and Joint Patents as described above in Section 11.2(a) or 11.2(b), as applicable. Each Party shall also promptly provide to the other Party all information reasonably requested by such other Party with regard to such Party’s activities pursuant to this Section 11.2. Each Party shall hold all information disclosed to it by the other Party under this Section as Confidential Information of the other Party.

(e) Prosecution and Maintenance Costs. Costs incurred in connection with the Prosecution and Maintenance activities undertaken by a Party pursuant to this Section 11.2 shall: (i) be borne exclusively by La Jolla if incurred prior to the Full Participation Point; and (ii) be taken into account as set forth in the Financial Appendix when calculating Other Operating Expense, if incurred on or after the Full Participation Point. Notwithstanding the foregoing, any FTE Costs or Out-of-Pocket Expenses attributable to the transition of Prosecution and Maintenance of the La Jolla Patents to BioMarin CF’s counsel after the Full Participation Point shall be borne exclusively by BioMarin CF and shall not be Shared Costs.

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11.3 Enforcement.

(a) Notice. If either Party becomes aware of any actual or threatened infringement of any La Jolla Patent in the Territory, or Joint Patent, by the manufacture, use, development or commercialization in the Territory of a product containing a Compound (each, an “Infringement”), that Party shall promptly notify the JSC and the other Party in writing.

(b) Enforcement Actions.

(i) Except as otherwise agreed, prior to the Full Participation Point, La Jolla shall have the first right (but not the obligation) to bring and control any action or proceeding with respect to the Infringement of any La Jolla Patent in the Territory and/or Joint Patent, or to defend any declaratory judgment action with respect thereto (for the purposes of this Section 11.3, an “Enforcement Action”). La Jolla agrees not to settle any Enforcement Action, or make any admissions or assert any position in such Enforcement Action, in a manner that would adversely affect BioMarin CF’s rights or interests, including with respect to BioMarin CF’s rights and interests in the Compound and/or Products within the Territory, or in the La Jolla Patent within the Territory, and/or the Joint Patent, without the prior written consent of BioMarin CF, which shall not be unreasonably withheld or delayed.

(ii) After the Full Participation Point, BioMarin CF shall have the first right (but not the obligation) to bring and control any Enforcement Action. BioMarin CF agrees not to settle any Enforcement Action, or make any admissions or assert any position in such Enforcement Action, in a manner that would adversely affect the rights or interests of La Jolla in the Compound and/or a Product, or the validity, enforceability or scope of any La Jolla Patent within the Territory, without the prior written consent of La Jolla, which shall not be unreasonably withheld or delayed. The out-of-pocket costs incurred by the Parties in pursuing an Enforcement Action in accordance with this Section 11.3 shall be shared as Other Operating Expense pursuant to the Financial Appendix, if incurred on or after the Full Participation Point.

(c) Cooperation. The Party initiating or defending any Enforcement Action pursuant to this Section 11.3 shall keep the other Party reasonably informed of the progress and status of any such Enforcement Action. The Parties shall assist one another and cooperate in any such Enforcement Action at the other’s reasonable request (including joining as a party plaintiff to the extent necessary or so requested by the other Party).

(d) Recoveries. Any recovery obtained by a Party as a result of any Enforcement Action pursuant to this Section 11.3, by settlement or otherwise, shall be included as Other Operating Income for purposes of determining Profit/Loss under Section 7.12 above and the Financial Appendix.

11.4 Third Party Infringement Claims. If the production, sale, offer for sale, or use of the Compound or Product pursuant to this Agreement results in a claim, suit or proceeding alleging patent infringement against La Jolla or BioMarin CF (or their respective Affiliates, licensees or Sublicensees) (collectively, “Infringement Actions”), such Party shall promptly notify the other

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Party hereto in writing, and the Parties shall promptly confer to consider the claim or assertion and the appropriate course of action. Unless the Parties otherwise agree in writing, each Party shall have the right to defend itself against a suit that names such Party as a defendant; provided, however, that the other Party may participate in the defense and/or settlement thereof at its own expense with counsel of its choice. The Party who is subject to the Infringement Action agrees not to settle such Infringement Action, or make any admissions or assert any position in such Infringement Action, in a manner that would adversely affect the manufacture, use or sale of the Compound or Products within the Territory, or that admits the infringement or validity of any Third Party Patent, without the approval of the other Party, such approval not to be unreasonably withheld. In any event, each Party shall reasonably assist the other Party and cooperate in connection with any litigation in which such Party is not that named as a defendant, at the defending Party’s request and expense. Further, the Party that is subject to the Infringement Action agrees to keep the other Party hereto reasonably informed of all material developments in connection with any such Infringement Action. The out-of-pocket costs incurred by the Parties in defending an Infringement Action (other than any expenses incurred by the Party who has elected to participate in the defense and/or settlement thereof at its own expense with counsel of its choice as provided above) shall in accordance with this Section 11.4 shall be shared as Other Operating Expense pursuant to the Financial Appendix.

11.5 Patent Marking. BioMarin CF agrees to mark, and have its Affiliates and Sublicensees mark, all patented Products or packaging thereof sold or distributed in the Territory pursuant to this Agreement in accordance with the applicable patent statutes or regulations in the country or countries of manufacture or sale thereof.

11.6 Third Party Technologies.

(a) Existing Third Party Technology. With respect to the Prosecution and Maintenance, and enforcement, of La Jolla Patents licensed by La Jolla from a Third Party, except as provided in Exhibit 11.6, La Jolla shall cooperate with BioMarin CF to Prosecute and Maintain, and to enforce, such La Jolla Patents in the Territory in the same manner as set forth in Sections 11.2 and 11.3 above. As between La Jolla and BioMarin CF, any recoveries from enforcement of such La Jolla Patents licensed from a Third Party (including any amounts that La Jolla receives from the Third Party licensor as a result of such enforcement) shall be shared in accordance with Section 11.3(d), after deducting from such recoveries any amounts owed to the Third Party licensor for such enforcement; provided that any Enforcement Actions initiated by the Third Party licensor shall be deemed initiated by La Jolla for purposes of Section 11.3(d), and the costs and expenses incurred by La Jolla in such Enforcement Action shall include the costs and expenses reimbursed or required to be reimbursed by La Jolla to the Third Party licensor in such Enforcement Action.

(b) Provisions of Existing In-License. It is understood that the Existing In-License may require that particular provisions be incorporated into a sublicense granted thereunder. The text of any such provisions in the Existing In-License is set out on Exhibit 11.6 attached hereto and shall be deemed incorporated by reference into this Agreement. BioMarin CF agrees to be bound by the provisions set out on Exhibit 11.6 to the extent applicable to BioMarin CF in its capacity as a sublicensee under the Existing In-License. In addition, BioMarin CF, in its capacity as a sublicensee under the Existing In-License, agrees to comply with the obligations applicable to sublicensees under such agreement, as set forth on Exhibit 11.6.

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(c) New Technology. [****]

ARTICLE XII

TRADEMARKS

12.1 Display. BioMarin CF shall be responsible, in consultation with La Jolla, for the development of all packaging materials, labels and promotional materials relating to Products (“Product Promotional Materials”) for use in the Territory. All Product Promotional Materials for use in the Territory shall display the Product Trademarks and no other product-specific trademarks or branding. The trade marks of BioMarin CF, trade dress, style of packaging and the like with respect to each Product within the Territory may be determined by BioMarin CF in a manner that is consistent with BioMarin CF’s standard trade dress and style. To the extent permissible by law and, if necessary, as approved by an applicable Regulatory Authority, BioMarin CF shall also include La Jolla’s trademark and/or tradename on the label, primary packaging and package inserts for each Product and all promotional materials for the Product in equal size and prominence, as nearly as allowed by applicable regulations in the relevant jurisdiction.

12.2 Title. As between the Parties, La Jolla shall own, and is hereby assigned, all right, title and interest in and to the Product Trademarks, and all good will arising out of the use of the Product Trademarks shall inure to the benefit of La Jolla. Subject to the foregoing, BioMarin CF shall own all right, title and interest in and to the copyright of all Product Promotional Materials.

12.3 Grant of License. Subject to the terms and conditions of this Agreement, La Jolla hereby grants to BioMarin CF a co-exclusive license to use the Product Trademarks in the United States, and an exclusive license to use the Product Trademarks in each other country of the Territory, for the packaging, marketing, distributing, sale and promotion of the Products in accordance with this Agreement. The rights and license granted by La Jolla to BioMarin CF in this Section 12.3 and in Section 12.4 below shall commence on the Effective Date, but BioMarin CF agrees not to exercise such rights or license prior to the Full Participation Point.

12.4 Registration of Trade Marks. Subject to Section 12.3 above, BioMarin CF shall file, register and maintain, for the term of this Agreement appropriate registrations for the Product Trademarks, as mutually agreed by La Jolla and BioMarin CF, in each country of the Territory in which Products are or will be sold. Such registrations for the Product Trademarks shall be obtained by BioMarin CF in La Jolla’s name.

12.5 Certain Covenants. BioMarin CF agrees that neither it, nor any of its Affiliates, shall at any time during the term of this Agreement: (a) challenge the Product Trademarks or the registration thereof in any country; or (b) register, or attempt to register, any trademarks or trade names that are confusingly similar to the Product Trademarks; or (c) use any Product Trademark in connection with any product other than a Product for use within the Territory; nor shall BioMarin CF or any of its Affiliates authorize or assist any Third Party to do any of the foregoing.

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12.6 Recordation of Licenses. In those countries where a trademark license may be recorded, La Jolla will provide to BioMarin CF, on BioMarin CF’s written request, a separate trademark license for the Product Trademarks and BioMarin CF will arrange for the recordation of such trade mark license with the appropriate governmental agency, promptly following receipt of such license from La Jolla. BioMarin CF shall cooperate in the preparation and execution of such documents.

12.7 Approval of Packaging and Promotional Materials. To the extent required by law to protect and preserve La Jolla’s rights in a Product Trademark or La Jolla’s trade name, then as reasonably requested by La Jolla, BioMarin CF shall submit representative Product Promotional Materials, packaging and samples of Product displaying the Product Trademarks and/or La Jolla’s trade name to La Jolla for La Jolla’s review and approval, prior to the first use of such Product Promotional Materials, packaging or Product and prior to any subsequent change or addition to such Product Promotional Materials, packaging or Product. If La Jolla has not responded within three (3) business days after the submission of such promotional materials, packaging or Product, La Jolla’s approval will be deemed to have been received.

12.8 Enforcement. La Jolla and BioMarin CF shall reasonably cooperate with each other to protect Product Trademarks in the Territory. The Parties shall cooperate reasonably and in good faith to determine whether and to what extent to institute and prosecute or defend any actions or proceedings involving or affecting Product Trademarks in the Territory, and all settlements relating thereto are subject to the mutual agreement of the Parties (such agreement not to be unreasonably withheld by either Party). The Parties shall reasonably cooperate in any action taken to enforce or defend their rights in Product Trademarks in the Territory, including taking appropriate appeals.

12.9 Termination of Trade Mark License. BioMarin CF’s right to use the Product Trademarks and the La Jolla trade name shall terminate in each country of the Territory in which BioMarin CF’s rights to distribute the Products are terminated or expire. BioMarin CF shall take all such steps as La Jolla may reasonably request to give effect to the termination of the license to the Product Trademarks and La Jolla trade name in such country and to record any documents that may be required to evidence the termination of such license.

12.10 Trademark Costs. Costs incurred in connection with the filing, prosecuting and maintaining and enforcing the Product Trademarks in the Territory, and the recordation of Product Trademark licenses for use with Products within the Territory shall be taken into account as set forth in the Financial Appendix when calculating Other Operating Expense, if incurred on or after the Full Participation Point.

ARTICLE XIII

TERM AND TERMINATION

13.1 Term. This Agreement shall commence on the Effective Date, and unless terminated earlier as provided in Section 7.8, or this Article 13, shall continue in full force and effect until there is no further Net Sales of any Product and no further development activities with respect to any Product within the Territory and thereafter until disposition, redeployment or shutdown of all operations and assets related to the Products.

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13.2 Breach. Either Party to this Agreement may terminate this Agreement in the event (a) the other Party shall have materially breached or defaulted in the performance of any of its material obligations under this Agreement, and such default shall have continued for [****] after written notice thereof was provided to the breaching Party by the non-breaching Party (provided that if such breach is not reasonably curable within [****], but a cure is possible, then for such longer period as necessary so long as the defaulting Party is diligently and in good faith working on a cure [****] or (b)(x) the other Party (i) applies for or consents to the appointment of a receiver, trustee, liquidator 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 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 (iv) takes any action for the purpose of effecting any of the foregoing; or (y) 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. In the case of clause (a), any such termination shall become effective upon written notice by the non-breaching Party to the breaching Party issued after the expiration of the applicable cure period unless the breaching Party has cured any such breach or default prior to the expiration of such cure period. In the case of clause (b) any such termination shall become effective immediately. A material breach or default in the performance of any of a Party’s material obligations under the Securities Purchase Agreement shall be deemed to be a material breach or default under this Agreement.

13.3 Convenience. BioMarin CF may terminate this Agreement in its entirety for any reason upon [****] prior written notice to La Jolla and upon exercise of its rights hereunder no further payment shall be due to La Jolla under Article 7 subsequent to the exercise of such right.

13.4 Election Not to Pay Under Sections 7.2, 7.3, 7.4 and 7.13. [****]

ARTICLE XIV

EFFECT OF TERMINATION

14.1 Accrued Obligations. The expiration or termination of this Agreement for any reason shall not release either Party from any liability that, at the time of such expiration or termination, has already accrued to the other Party or that is attributable to a period prior to such expiration or termination, nor will any termination of this Agreement preclude either Party from pursuing all rights and remedies it may have under this Agreement, or at law or in equity, with respect to breach of this Agreement.

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14.2 Right of Sale/Right of Purchase.

14.2.1 Right of Sale. [****]

14.2.2 Right of Purchase.

(a) [****]

(b) [****]

(c) [****]

(d) [****]

(e) [****]

(f) [****]

14.3 Procedure. The Purchase Price under Section 14.2.2(b) and (c) above shall be determined by the mutual agreement of BioMarin CF and La Jolla. In determining the Purchase Price of the Purchased Interests, the Parties shall take into account the present value of all milestone payments remaining to be paid and the likelihood of such payments being made to La Jolla. [****]

14.4 Termination under Sections 13.2 or 13.3. If this Agreement is terminated pursuant to Section 13.2 and the terminating Party does not exercise its right of purchase pursuant to Section 14.2.2, then such termination will be treated as a termination of this Agreement on expiration of term in accordance with Section 14.5. If this Agreement is terminated pursuant to (x) Section 13.2 and the terminating Party triggers its right of purchase pursuant to Section 14.2.2, or in the case of Section 14.2.1, BioMarin CF triggers its Sale Right pursuant to Section 14.2.1, or (y) Section 13.3, then such termination will be subject to the following terms:

(a) Wind-down Period.

(i) Development. If, on the date of notice of such termination, the breaching Party in the case of a termination under Section 13.2 and BioMarin CF in the case of a termination under Section 13.3 (the “Eliminated Party”) or any of its Affiliates was conducting any ongoing clinical trials of a Product in the Territory (“Ongoing Trials”), then, to the extent and as requested by the other Party (the “Remaining Party”), the Eliminated Party shall promptly transition to the Remaining Party or its designee such Ongoing Clinical Trials or portions thereof or continue such trials for a period requested by the Remaining Party [****] (“Development Transition Period”). The Development Costs that the Eliminated Party reasonably incurs during the remaining term of this Agreement in performing such Ongoing Trials shall be shared equally by the Parties in accordance with Section 7.12 and the Financial Appendix.

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(ii) Commercialization. With respect to Products being commercialized within the Territory at the time of such termination, to avoid a disruption in the supply of such Products to patients, the Eliminated Party, its Affiliates and its Sublicensees may cease all promotion of such Product as of the effective date such termination, but shall continue to sell and distribute each such Product in each country of the Territory for which Marketing Approval for such Product has been obtained, in accordance with the terms and conditions of this Agreement, for a period requested by the Remaining Party not to exceed [****] (the “Wind-down Period”); provided that the Eliminated Party, its Affiliates and its Sublicensees shall cease such activities, or any portion thereof, in a given country upon [****] by the Remaining Party requesting that such activities (or portion thereof) be ceased. Notwithstanding any other provision of this Agreement, during the Wind-down Period, the Eliminated Party’s and its Affiliates’ and Sublicensees’ rights with respect to the Compound and Products within the Territory shall be non-exclusive and, without limiting the foregoing, the Remaining Party shall have the right to engage one or more other distributor(s) and/or licensee(s) of any Product in all or part of the Territory. During the Wind-down Period, the Parties’ sharing of Profit/Loss shall continue with respect to any Product sold or disposed by the Eliminated Party, its Affiliates or Sublicensees in the Territory. Within [****] after the expiration of the Wind-down Period, the Eliminated Party shall notify the Remaining Party of any quantity of Products remaining in the Eliminated Party’s inventory and the Remaining Party shall have the option, upon notice to the Eliminated Party, to repurchase any such quantities of Product from the Eliminated Party at a price equal to the transfer price paid by the Eliminated Party for such Product.

(iii) Manufacturing. [****]

(b) Assignment of Regulatory Filings and Marketing Approvals. At the Remaining Party’s option, which shall be exercised by written notice to the Eliminated Party, the Eliminated Party shall assign or cause to be assigned to the Remaining Party or its designee (or, to the extent not so assignable, the Eliminated Party shall take all reasonable actions to make available to the Remaining Party or its designee the benefits of) all regulatory filings and registrations (including INDs, MAAs and Marketing Approvals) for all Products within the Territory, including any such regulatory filings and registrations made or owned by the Eliminated Party’s Affiliates and/or Sublicensees. In each case, unless otherwise required by any applicable law or regulation, the foregoing assignment (or availability) shall be made within [****].

(c) Data and Know-How Disclosure. Within [****], the Eliminated Party shall provide to the Remaining Party all Data and the Eliminated Party Know-How pertaining to all Products in the Territory. Such disclosure shall be in electronic form reasonably usable by the Remaining Party and, if reasonably necessary in connection with the Remaining Party’s (or its designee’s) further development, manufacture and/or commercialization of Products, shall include original hardcopies or duplicate copies thereof, as required. The Remaining Party shall have the right to use and disclose all Data and Know-How of the Eliminated Party following termination of this Agreement as provided in Section 14.4(e) below.

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(d) Transition. The Eliminated Party shall use diligent efforts to cooperate with the Remaining Party and/or its designee to effect a smooth and orderly transition in the development, sale and ongoing marketing, promotion and commercialization of the Products in the Territory during the Wind-down Period, including making its personnel and other resources reasonably available to the Remaining Party. If the Eliminated Party has entered into contracts with contractors or vendors that are necessary or useful for the Remaining Party to take over responsibility with respect to the Products in the Territory, then the Eliminated Party shall, to the extent possible and requested in writing by the Remaining Party, assign all of the relevant Third Party agreements to the Remaining Party, or otherwise cooperate to make such arrangements available to the Remaining Party or its designee for purposes of the Products. Without limiting the foregoing, the Eliminated Party shall use diligent efforts to conduct in an expeditious manner any activities to be conducted under this Section 14.4.

(e) Licenses. [****]

(f) Sublicensees. Any contracts with Sublicensees of a Product within the Territory engaged by the Eliminated Party other than the Eliminated Party’s Affiliates shall be assigned to the Remaining Party to the extent the Eliminated Party has the right to do so and the Remaining Party so requests. In the event such assignment is not requested by the Remaining Party, or the Eliminated Party does not have the right to do so, then the rights of such Sublicensees shall terminate upon termination of the Eliminated Party’s rights with respect to the Territory. The Eliminated Party shall ensure that its Affiliates and such Sublicensees (if not assigned to the Remaining Party pursuant to this Section 14.4(f) shall transition all Products back to the Remaining Party in the manner set forth in this Section 14.4 as if such Affiliate or Sublicensee were named herein.

(g) Return of Materials. Within [****] upon request by the Remaining Party, the Eliminated Party shall either return to the Remaining Party or destroy all Confidential Information of the Remaining Party that is in the Eliminated Party’s possession and shall provide the Remaining Party with written confirmation of such destruction or return, as applicable. Effective upon the end of the Wind-down Period, the Eliminated Party shall cease to use all trademarks and trade names of the Remaining Party (including the Product Trademarks) in the Territory, and, except as provided in Section 14.6 below, all rights granted to the Eliminated Party hereunder with respect to the Compound and Products in the Territory shall terminate. In addition, all Data generated by or under authority of the Eliminated Party hereunder during the term of the Agreement shall, to the extent it specifically pertains to the Compound or the Product, be deemed Confidential Information of the Remaining Party and not Confidential Information of the Eliminated Party (and will not be subject to the exclusion under Section 10.1(a) and (e) above).

14.5 Expiration of Term. [****]

14.6 Surviving Sections and Articles. Articles 1, 13, 14, 15 (but only to the extent necessary for a Party to enforce its rights as of the date of termination of this Agreement), 16 (but only to the extent necessary to cover sales of Products and the performance of each Party’s obligations under this Agreement up to and including the date of termination of this Agreement) and 18 and Sections 10.1, 10.2, 10.3, 10.5(c), 10.6, 11.1 and, only to the extent of matters existing as of or occurring prior to the date of termination of this Agreement, 11.4 and 11.6, shall survive the

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termination of this Agreement for any reason and all other Articles and Sections shall expire and be of no further force and effect as of the date of termination of this Agreement except that Sections 7.14(b), 7.14(c), 7.15, 7.16, 7.17 and 7.18 shall survive for as long as necessary solely for the purpose of settlement of accounts relating to periods prior to the date of the termination of this Agreement, and provided further that upon an expiration of this Agreement pursuant to Sections 13.1 and 14.5, Section 12.3 will survive on a non-exclusive basis and Section 12.9 will not thereafter apply to BioMarin CF. Notwithstanding the foregoing, Sections 11.2 and 11.3 shall survive as contemplated in Section 14.4. In addition, during the Wind-down Period, a Party’s rights under Section 4.3(a), 5.3 and 5.4 shall survive to the extent such Party has surviving rights under this Agreement to commercialize Products and Compounds in the Territory and to use Know-How of the other Party; except that any sublicenses granted by La Jolla to an Asia-Pacific Licensee prior to the date of termination of this Agreement in accordance with Section 4.3(a) under the BioMarin CF Know-How or Patents claiming BioMarin CF Improvements shall also survive and continue in effect. Except as otherwise provided in this Article 14, all rights and obligations of the Parties under this Agreement shall terminate upon the expiration or termination of this Agreement for any reason. In the event that this Agreement expires or is terminated under Article 13 above, the Securities Purchase Agreement shall survive in accordance with its terms. In addition, all obligations of one Party to another at the time of expiration under any representation, warranty, covenant or agreement or in respect of any breach thereof or default thereunder shall remain in full force and effect without waiver thereof by a Party hereunder to enforce its rights in respect thereof.

ARTICLE XV

REPRESENTATIONS, WARRANTIES AND COVENANTS

15.1 General Representations. Each Party hereby represents and warrants to the other Party that, as of the Effective Date:

(a) Duly Organized. Such Party is a corporation duly organized, validly existing and is in good standing under the laws of the jurisdiction of its incorporation, is qualified to do business and is in good standing as a foreign corporation 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 such Party from performing its obligations under this Agreement.

(b) Due Execution; Binding Agreement. This Agreement is a legal and valid obligation binding upon such Party and enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by such Party have been duly authorized by all necessary corporate action and do not and will not: (i) require any consent or approval of its stockholders; (ii) to such Party’s knowledge, violate any law, rule, regulation, order, writ, judgment, decree, determination or award of any court, governmental body or administrative or other agency having jurisdiction over such Party; nor (iii) conflict with, or constitute a default under, any agreement, instrument or understanding, oral or written, to which such Party is a party or by which it is bound.

(c) Authorizations. Such Party has obtained all necessary consents, approvals and authorizations of all Regulatory Authorities, other governmental authorities and other persons or entities required to be obtained by such Party in order to enter into this Agreement and to otherwise perform such Party’s obligations under this Agreement.

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(d) No Other Affiliates. As of the Effective Date, such Party does not have any Affiliates that are not Controlled Affiliates.

15.2 Representations and Warranties of La Jolla. La Jolla represents, warrants and covenants to BioMarin CF that, as of the Effective Date:

(a) it exclusively owns all right title, and interest in or otherwise has full rights and authority to grant the rights and licenses under the La Jolla Patents and the La Jolla Know-How; except as described in Exhibit 15.2;

(b) it has not previously granted, and will not grant during the term of this Agreement, any right, security interest, option, lien, license, or encumbrance of any nature under the La Jolla Patents and/or La Jolla Know-How, or any portion thereof, that conflicts with the rights and licenses granted to BioMarin CF under this Agreement;

(c) to La Jolla’s Knowledge, there are no actual, pending, alleged or threatened actions, suits, claims, interference or governmental investigations in the Territory involving the Compound, Products, the La Jolla Patents or the La Jolla Know-How by or against La Jolla. In particular, to La Jolla’s Knowledge, (i) there is no pending or threatened litigation involving any claims based on product liability or infringement or misappropriation of any intellectual property rights of any Third Party in relation to the Compound or Products, and (ii) there is no pending or threatened reexamination, opposition, or interference proceeding involving any La Jolla Patent or any other pending or threatened proceeding or action challenging the validity or enforceability of any La Jolla Patent. In addition, La Jolla has not received notice of and has not filed any suit, claim, action or proceeding related to any of the foregoing matters;

(d) to La Jolla’s Knowledge, developing, using, making, selling, offering for sale, importing, or exporting the Compound or a Product, BioMarin CF’s exercise of the rights licensed hereunder, or BioMarin CF’s performance of the activities contemplated herein shall not infringe, directly or indirectly, any patent or other intellectual property right of a Third Party under the laws of any country within the Territory;

(e) to La Jolla’s Knowledge, there is no actual, pending, alleged or threatened infringement by a Third Party of any of the La Jolla Patents or misappropriation by a Third Party of any of the La Jolla Know-How; and

(f) to La Jolla’s Knowledge, none of the issued La Jolla Patents are invalid or unenforceable;

(g) except as described in Exhibit 15.2, all La Jolla Patents have been filed, prosecuted, and maintained at the respective patent offices in accordance with applicable laws and regulations;

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(h) Exhibit 1.25 includes all pending patent applications and issued patents owned by or licensed to La Jolla that claim or relate to the development, manufacture and/or commercialization of the Compound and/or the Products;

(i) except as set forth on Exhibit 1.25, the Existing In-License is the only agreement entered into before the Effective Date between La Jolla and a Third Party under which La Jolla is granted a license under or is assigned any of such Third Party’s intellectual property rights that are used in or relate to the development, manufacture, and/or commercialization of the Compound and/or the Products by BioMarin CF in accordance with this Agreement and prior to the Effective Date La Jolla has secured the consent of the Existing In-License licensor to the transactions contemplated by this Agreement in the form attached hereto as Exhibit 15.2I;

(j) as of the Effective Date, the Existing In-License is in full force and effect in accordance with its terms, and La Jolla is not in breach of the Existing In-License and has not received any notice from the licensor that La Jolla is in breach of the Existing In-License;

(k) La Jolla has provided BioMarin CF a true, correct, and complete copy of the Existing In-License; and

(l) La Jolla does not have any knowledge that any of BioMarin CF’s representations, warranties and covenants set forth in Section 15.1 above and Section 15.3 below are inaccurate.

15.3 Representations and Warranties of BioMarin CF. BioMarin CF represents, warrants and covenants to La Jolla that, as of the Effective Date:

(a) it has the full right and authority to grant the rights and licenses granted herein;

(b) it has not previously granted, and will not grant during the term of this Agreement, rights under any Patents owned by BioMarin CF and/or BioMarin CF Know-How, or any portion thereof, that conflict with the rights and licenses granted to La Jolla under this Agreement;

(c) neither BioMarin CF nor its Affiliates have initiated any human clinical trials or other development activities with respect to, and are not commercializing, any products specifically directed to the treatment of lupus, and are not engaged in contract negotiations with respect to in-licensing or acquiring any specific product directed to the treatment of lupus; and

(d) neither BioMarin CF nor any of its Affiliates owns or Controls: (i) any Patents containing claims covering the Compound or a Product, nor (ii) Patents or other intellectual property that are necessary for the development or commercialization of the Compound or Products; and

(e) BioMarin CF does not have any knowledge that any of La Jolla’s representations and warranties set forth in Sections 15.1 and 15.2 above are inaccurate.

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15.4 DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OR VALIDITY OF ANY PATENTS ISSUED OR PENDING.

ARTICLE XVI

INDEMNIFICATION

16.1 Indemnification of La Jolla. BioMarin CF shall indemnify and hold harmless each of La Jolla, its Affiliates and the directors, officers, stockholders and employees of such entities and the successors and assigns of any of the foregoing (the “La Jolla Indemnitees”), from and against any and all liabilities, damages, penalties, fines, costs, expenses (including, reasonable attorneys’ fees and other expenses of litigation) (“Liabilities”) from any claims, actions, suits or proceedings brought by a Third Party (a “Third Party Claim”) incurred by any La Jolla Indemnitee, arising from, or occurring as a result of: (a) any material breach of any representations, warranties or covenants by BioMarin CF in Article 15 above; (b) any Products Liability Claim (subject to and shared in accordance with the mechanism set forth in Section 16.5 below); or (c) the gross negligence or willful misconduct of a BioMarin CF Indemnitee; except to the extent such Third Party Claims fall within the scope of La Jolla’s indemnification obligations set forth in Section 16.2 below.

16.2 Indemnification of BioMarin CF. La Jolla shall indemnify and hold harmless each of BioMarin CF, its Affiliates and Sublicensees and the directors, officers and employees of BioMarin CF, its Affiliates and Sublicensees and the successors and assigns of any of the foregoing (the “BioMarin CF Indemnitees”), from and against any and all Liabilities from any Third Party Claims incurred by any BioMarin CF Indemnitee, arising from, or occurring as a result of: (a) any material breach of any representations, warranties or covenants by La Jolla in Article 15 above; (b) any Products Liability Claim (subject to and shared in accordance with the mechanism set forth in Section 16.5 below); or (c) the gross negligence or intentional misconduct of a La Jolla Indemnitee; except to the extent such Third Party Claims fall within the scope of BioMarin CF’s indemnification obligations set forth in Section 16.1 above.

16.3 Procedure. Except with respect to Product Liability Claims subject to Section 16.5 below, a Party that intends to claim indemnification under this Article 16 (the “Indemnitee”) shall promptly notify the other Party (the “Indemnitor”) in writing of any Third Party Claim, in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall have sole control of the defense and/or settlement thereof. The indemnity arrangement in this Section 16.3 shall not apply to amounts paid in settlement of any action with respect to a Third Party Claim, if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld or delayed unreasonably. The failure to deliver written notice to the Indemnitor within a reasonable time after the commencement of any action with respect to a Third Party Claim, if prejudicial to its ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Section 16.3, but the omission to so deliver written notice to the Indemnitor shall not relieve the Indemnitor of any liability that it may have to any Indemnitee otherwise than under this Section 16.3. The Indemnitee under this Section 16.3 shall cooperate fully with the Indemnitor and its legal representatives in the investigation of any action with respect to a Third Party Claim covered by this indemnification.

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16.4 Recalls.

(a) Voluntary and Mandatory Recalls; Decision-Making. To the extent that: (a) any Regulatory Authority in the Territory issues a directive or order that a Product be recalled or withdrawn in any country within the Territory; (b) a court of competent jurisdiction orders a recall or withdrawal of a Product in any country within the Territory, or (c) the JSC determines that the Product should be recalled or withdrawn voluntarily in any country within the Territory, the Parties shall recall or withdraw a Product as set forth in this Section 16.4. As between the Parties, BioMarin CF shall implement and coordinate all activities that the JSC determines are reasonably necessary in connection with such recall or withdrawal of the Product within the Territory, including making all contact with relevant Regulatory Authorities; provided, however, that BioMarin CF shall not take any material action with respect to any such recall without first consulting in good faith with La Jolla and obtaining approval of the JSC, to the extent practicable, and BioMarin CF shall consider in good faith any comments of La Jolla in connection with any aspect of the management of any such recall. In any event, BioMarin CF shall undertake all activities in connection with such recall or withdrawal of a Product within the Territory in accordance with any procedures or instructions of the JSC and, in any event, in a manner designed to minimize any harm to the marketability of the Products and the reputation of each Party. La Jolla shall have the right to participate, upon its request, in any statements relating to such action to the extent feasible in the circumstances, and the Parties shall keep each other informed with respect to the status thereof. At a Party’s request, the other Party shall provide reasonable assistance in conducting such recall, market withdrawal or other corrective actions, including, providing all pertinent records that such Party may reasonably request to assist in effecting such action. For clarity, all matters relating to a withdrawal or recall of a Product in the Asia-Pacific Territory shall be determined, controlled and coordinated by La Jolla.

(b) Costs of Recall. All Out-Of-Pocket Expenses and FTE Costs (each as defined in the Financial Appendix) incurred by a Party for the execution of any recall or withdrawal of the Product (“Recall Costs”) pursuant to Section 16.4(a) above shall be included in the calculation of Profit/Loss pursuant to the Financial Appendix; except to the extent that [****]:

(i) [****];

(ii) [****].

16.5 Products Liability Claims.

(a) Each Party shall notify the other Party as promptly as practicable if any Third Party Claim is commenced or threatened against such Party alleging product liability, product defect, design, packaging or labeling defect, failure to warn, or any similar action relating to the use or safety of a Product in the Territory (“Product Liability Claim”).

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(b) Each Party shall cooperate with the other Party in connection with any such Product Liability Claim that is commenced or threatened against the other Party. If a Product Liability Claim is asserted against both Parties, each Party will have the right to designate counsel to defend itself in the Product Liability Claim. If a Product Liability Claim is brought against one Party but not the other Party, the named Party shall control the defense and/or settlement thereof at its own expense with counsel of its choice, subject to this Section 16.5. In such case, the other Party may participate in the defense and/or settlement thereof to the extent related to Products in the Territory at its own expense with counsel of its choice. In any event, the Party that is subject to the Product Liability Claim to the extent related to Products in the Territory (if not asserted against both Parties) agrees to keep the other Party hereto reasonably informed of all material developments in connection with any such Product Liability Claim.

(c) Neither Party shall settle any Product Liability Claim, or make any admissions or assert any position in such Product Liability Claim, in a manner that would adversely affect a Product or the manufacture, use or sale thereof without the prior written consent of the other Party, which shall not be withheld unreasonably.

(d) To the extent a Product Liability Claim is caused by: [****].

16.6 WAIVER OF CERTAIN CLAIMS. THE PARTIES AGREE THAT IN ENFORCING ANY RIGHT TO INDEMNITY UNDER THIS AGREEMENT OR IN MAKING ANY CLAIM FOR BREACH OF THIS AGREEMENT, A PARTY SHALL HAVE NO RIGHT OR CLAIM FOR SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES AND ALL SUCH SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL AND PUNITIVE DAMAGES ARE HEREBY WAIVED; PROVIDED HOWEVER THAT NOTHING IN THIS SECTION 16.6 SHALL BE DEEMED TO LIMIT THE INDEMNIFICATION OBLIGATIONS OF EITHER PARTY UNDER THIS ARTICLE 16 TO THE EXTENT A THIRD PARTY RECOVERS ANY SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES FROM AN INDEMNITEE.

ARTICLE XVII

DISPUTE RESOLUTION

17.1 Determination by CEOS.[****]

17.2 Arbitration Proceedings. Notwithstanding anything to the contrary contained in Section 17.1, if a dispute (the “Dispute”) exists with respect to the approval under Section 4.2 of an Operating Plan/Budget, or any material amendment thereto, and such dispute is submitted to dispute resolution as contemplated by Section 17.1, then if the Chief Executive officer of one Party makes a determination to approve an Operating Plan/Budget over the objection of the Chief Executive Officer of the other Party (the “Objecting Party”) as permitted by Section 17.1, within seven (7) calendar days of such decision the Objecting Party may demand that such Operating Plan/Budget be submitted to arbitration as contemplated by Section 17.3 [****] or (iii) the settlement of a dispute under Section 7.17 shall also be deemed to be a Dispute and shall be resolved by arbitration in accordance with Section 17.3 below.

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17.3 Conduct of Arbitration.

(a) General Provisions. The arbitration contemplated by Section 17.2 shall be conducted by the Judicial Arbitration and Mediation Services, Inc. (or its successor entity) (“JAMS”) under its Streamlined Arbitration Rules and Procedures, as modified by this Section 17.3. The arbitration shall be conducted in the English language, by a single arbitrator. If the Parties are unable to agree on an arbitrator, the arbitrator shall be selected in accordance with the JAMS rules, or if the JAMS rules do not provide for such selection, by the chief executive of JAMS. At his or her election, the arbitrator may engage an independent expert with experience in the subject matter of the Dispute to advise the arbitrator, but final decision making authority shall remain in the arbitrator. Each Party shall provide the arbitrator and the other Party with a written report setting forth its position with respect to the substance of the Dispute and may submit a revised report and position to the arbitrator within five (5) business days of receiving the other Party’s report. If so requested by the arbitrator, each Party shall make oral submissions to the arbitrator based on such Party’s written report delivered pursuant to Section 17.3 (provided that the other Party shall have the right to be present during any such oral submissions) and each Party shall comply with any other procedures requested by the arbitrator.

(b) Decision of Arbitrator. In the case of a Dispute as to an Operating Plan/Budget or any modification thereof, after reviewing the written submissions and hearing any oral submissions of the Parties, the arbitrator shall determine whether the Operating Plan/Budget that is the subject of the Dispute is materially unfair to the Objecting Party based upon the criteria set forth in Section 17.2. In any case, the Parties agree that the decision of the arbitrator shall be the sole, exclusive and binding remedy between them regarding any Dispute presented to the arbitrator. The arbitration proceedings and the decision of the arbitrator shall be deemed Confidential Information of both Parties under Article 10 above.

(c) Location; Costs. Unless otherwise mutually agreed upon by the Parties, the arbitration proceedings shall be conducted in San Francisco, California. The Parties agree that they shall share equally the cost of the arbitration filing and hearing fees, the cost of the independent expert retained by the arbitrator and the cost of the arbitrator and administrative fees of JAMS. Each Party shall bear its own costs and attorney’ and witnesses’ fees and associated costs and expenses.

(d) Timetable for Completion in Thirty (30) Days. In any arbitration under this Section 17.3, the Parties and the arbitrator shall use all reasonable efforts to resolve such Dispute within thirty (30) days after the section of the arbitrator, or as soon thereafter as is reasonably practicable.

ARTICLE XVIII

GENERAL PROVISIONS

18.1 Force Majeure. If the performance of any part of this Agreement by either Party is prevented, restricted, interfered with or delayed by an occurrence beyond the reasonable control of the affected Party, including, fire, flood, embargo, power shortage or failure, acts of war, insurrection, riot, terrorism, strike, lockout or other labor disturbance or acts of God (a “Force

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Majeure Event”), the Party so affected shall, upon giving written notice to the other Party, be excused from such performance to the extent of such prevention, restriction, interference or delay; provided that the affected Party shall use its reasonable efforts to avoid or remove such causes of non-performance and shall continue performance with the utmost dispatch whenever such causes are removed. Neither Party shall be entitled to rely on a Force Majeure Event to relieve it from an obligation to pay money (including any interest for delayed payment) which would otherwise be due and payable under this Agreement.

18.2 Governing Law; Venue. This Agreement, and all questions regarding their respective validity or interpretation, or the breach or performance of this Agreement, shall be governed by, and construed and enforced in accordance with, the laws of the State of California, without reference to conflict of law principles. Except for Disputes expressly provided to be determined pursuant to Section 17.2 and 17.3 above, any dispute as to the performance, enforcement, termination, validity or interpretation of this Agreement shall be brought only in a federal court of competent jurisdiction (or a state court if no federal court has jurisdiction) located in Northern District of California and the Parties hereby submit to the exclusive jurisdiction and venue of such courts.

18.3 Waiver of Breach. Except as otherwise expressly provided in this Agreement, as applicable, any term of this Agreement may be waived only by a written instrument executed by a duly authorized representative of the Party waiving compliance. The delay or failure of either Party at any time to require performance of any provision of this Agreement shall in no manner affect such Party’s rights at a later time to enforce the same. No waiver by either Party of any condition or term in any one or more instances shall be construed as a further or continuing waiver of such condition or term or of another condition or term.

18.4 Modification. No amendment or modification of any provision of this Agreement shall be effective unless in writing signed by a duly authorized representative of each Party. No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing and signed by a duly authorized representative of each Party.

18.5 Severability. In the event any provision of this Agreement should be held invalid, illegal or unenforceable in any jurisdiction, the Parties shall negotiate in good faith a valid, legal and enforceable substitute provision that most nearly reflects the original intent of the Parties and all other provisions of this Agreement shall remain in full force and effect in such jurisdiction. Such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction. [****]

18.6 Entire Agreement. This Agreement (including Financial Appendix and the Exhibits attached hereto) and the Securities Purchase Agreement constitute the entire understanding between the Parties as of the Effective Date with respect to the subject matter hereof and supersede all prior or contemporaneous agreements, understandings or representations, either written or oral, between La Jolla and BioMarin CF with respect to such subject matter, including the Prior Agreement.

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18.7 Notices. Unless otherwise agreed by the Parties or specified in this Agreement, all communications between the Parties relating to, and all written documentation to be prepared and provided under, this Agreement shall be in the English language. Any notice required or permitted under this Agreement shall be in writing in the English language and shall be sufficient if: (a) delivered personally; (b) sent by registered or certified mail (return receipt requested and postage prepaid); (c) sent by express courier service providing evidence of receipt, postage pre-paid where applicable; or (d) sent by facsimile (receipt verified and a copy promptly sent by another permissible method of providing notice described in paragraphs (b), (c) or (d) above), to the following addresses of each Party or such other address for a Party as may be specified by like notice:

To La Jolla: La Jolla Pharmaceutical Company 6455 Nancy Ridge Drive San Diego, CA 92121 Telephone: (858) 452-6600 Facsimile: (858) 626-2851 Attention: Chief Executive Officer	With a copy to: Wilson, Sonsini, Goodrich & Rosati 650 Page Mill Road Palo Alto, CA 94304 Telephone: (650) 493-9300 Facsimile: (650) 493-6811 Attention: Kenneth A. Clark Goodwin Procter, LLP 53 State Street Boston, MA 02109 Fax: (617) 523-1231 Attention: Mitchell Bloom and Ryan A. Murr
To BioMarin CF: BioMarin CF Limited Dominion House 60 Montrose Avenue Nassau, New Providence, The Bahamas Telephone: (415) 506-6307 Facsimile: (415) 382-7889 Attention: Managing Director	With a copy to: BioMarin Pharmaceutical Inc. 105 Digital Drive Novato, CA 94949 Telephone: (415) 506-6307 Facsimile: (415) 506-6425 Attention: General Counsel

Any notice required or permitted to be given concerning this Agreement shall be effective upon receipt by the Party to whom it is addressed or within seven (7) days of dispatch whichever is earlier.

18.8 Assignment. Except as otherwise expressly provided herein, either Party may assign, license or otherwise transfer this Agreement, or any of its rights or obligations hereunder, to an Affiliate or to any Third Party without the written consent of the other Party hereto; provided that (a) the assigning Party provides notice of such assignment to the other Party; (b) the Affiliate or Third Party to whom this Agreement, or any of the assigning party’s rights or obligations are

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assigned has sufficient financial resources at the time of such assignment to allow such Affiliate or Third Party to perform the assigning Party’s obligations under this Agreement (or the portion thereof being assigned) as fully and expeditiously as the assigning Party; and (c) the entity to whom this Agreement, or any such rights or obligations are assigned, assumes in writing this Agreement, or such rights and obligations being assigned; which writing shall be in the form of a novation that relieves the assigning Party of all of its rights, obligations and liabilities under this Agreement (or the portion of this Agreement being assigned), effective on and from the date of such assignment. In the event of any such assignment by a Party, the other Party agrees to cooperate with the assigning Party and to take such actions as may be required (including executing any documents) to give effect to the foregoing. Notwithstanding the foregoing, with respect to any assignment or other transfer of this Agreement (or any part thereof) to an Affiliate, if the non-assigning Party reasonably believes such assignment or other transfer could result in material adverse tax consequences to the non-assigning Party, such assignment or other transfer shall not be made without the non-assigning Party’s consent (which shall not be unreasonably withheld). If an Affiliate of a Party books sales of Products in any country of the Territory, or receives any cash payments derived from Products in the Territory, then such Affiliate shall agree in writing to be bound by the terms and conditions of this Agreement as applicable to such Affiliate. Subject to the foregoing, this Agreement shall inure to the benefit of each Party, its successors and permitted assigns. Any assignment of this Agreement in contravention of this Section 18.8 shall be null and void.

18.9 No Partnership or Joint Venture. The Parties are and shall at all times be independent contractors. In performing under this Agreement, neither Party is an agent, employee, employer, joint venturer, or partner. Nothing in this Agreement is intended, or shall be deemed, to establish a joint venture, partnership or other fiduciary relationship between La Jolla and BioMarin CF. Neither Party to this Agreement shall have any express or implied right or authority to assume or create any obligations on behalf of, or in the name of, the other Party, or to bind the other Party to any contract, agreement or undertaking with any Third Party.

18.10 Interpretation. The captions to the several Articles and Sections of this Agreement are not a part of this Agreement, but are included for convenience of reference and shall not affect its meaning or interpretation. In this Agreement: (a) the word “including” shall be deemed to be followed by the phrase “without limitation” or like expression; (b) the singular shall include the plural and vice versa; and (c) masculine, feminine and neuter pronouns and expressions shall be interchangeable. Each accounting term used herein that is not specifically defined herein shall have the meaning given to it under U.S. Generally Accepted Accounting Principles, or other generally accepted cost accounting principles in the United States, but only to the extent consistent with its usage and the other definitions in this Agreement.

18.11 Export Laws. Notwithstanding anything to the contrary contained herein, all obligations of La Jolla and BioMarin CF are subject to prior compliance with the export regulations of the United States, the European Union or any other relevant country and such other laws and regulations in effect in the United States, the European Union or any other relevant country as may be applicable, and to obtaining all necessary approvals required by the applicable agencies of the governments of the United States, the countries within the European Union and any other relevant countries. La Jolla and BioMarin CF shall cooperate with each other and shall provide assistance to the other as reasonably necessary to obtain any required approvals.

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18.12 Counterparts; Facsimile Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Signatures provided by facsimile transmission shall be deemed to be original signatures.

[Remainder of page intentionally left blank; signature page follows.]

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IN WITNESS WHEREOF, the Parties have caused this Development and Commercialization Agreement to be executed as of the date first set forth above.

LA JOLLA PHARMACEUTICAL COMPANY		BIOMARIN CF LIMITED
By:	/s/ Deirdre Y. Gillespie	By:	/s/ G. Eric Davis
Name:	Deirdre Y. Gillespie, M.D.	Name:	G. Eric Davis
Title:	President and Chief Executive Officer	Title:	Managing Director

Exhibit List

Exhibit 1.4 – Asia-Pacific Territory

Exhibit 1.5 – ASPEN Study

Exhibit 1.9 – Compound

Exhibit 1.15 – Existing In-License

Exhibit 1.25 – La Jolla Patents

Exhibit 1.26 – La Jolla Senior Management Team

Exhibit 1.36 – Product Trademarks

Exhibit 1.41 – Securities Purchase Agreement

Exhibit 4.2B – Initial Development Plan/Budget

Exhibit 4.2E – Operating Plan/Budget Requirements

Exhibit 6.1B – Joint US Marketing Activities

Exhibit 9.1A – Manufacturing

Exhibit 11.6 – Existing Third Party Technology and Existing In-Licenses Provisions

Exhibit 15.2 – Exceptions to La Jolla’s Representations and Warranties

Exhibit 15.2I – Form of Consent of Existing In-License Licensor

Appendix List

Appendix A – Financial Appendix

Exhibit 1.4

Asia-Pacific Territory

Territories of East Asia, Southeast Asia, South Asia, and Oceania as follows:

East Asia: Mainland China, Hong Kong, Japan, Macau, Mongolia, North Korea, South Korea, Taiwan

Southeast Asia: Brunei, Cambodia, East Timor, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam

South Asia: Bangladesh, British Indian Ocean Territory, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka, Afghanistan

Oceania: New Zealand, Australia, Papua New Guinea, and neighboring islands in the Pacific Ocean, Melanesia, Micronesia, Polynesia

Exhibit 1.5

ASPEN Study

Protocol LJP 394-90-14: A Randomized, Double-Blind, Placebo-Controlled, Three-Arm, Parallel-Group, Multicenter, Multinational Safety and Efficacy Trial of 300 mg, and 900 mg of Abetimus Sodium In Systemic Lupus Erythematosus (SLE) Patients with a History of Renal Disease

Protocol LJP 394-90-18: A Double-Blind Randomized Cross-Over Trial to define the ECG effects of ABETIMUS using a Clinical and a Supratherapeutic Single Dose compared to Placebo and Moxifloxacin (a Positive Control) in Healthy Men and Women: A Thorough ECG ICH E14 Trial

Exhibit 1.9

Compound

Exhibit 1.15

Existing In-License

Exclusive License Agreement between The Johns Hopkins University and La Jolla (JHU Ref: DM-2179), dated November 25, 2002, as amended (the “JHU License”)

Exhibit 1.25

La Jolla Patents

ISSUED PATENTS

AS OF DECEMBER 8, 2008

Patent No.

US 5,606,047

US 5,633,395

US 7,115,581

US 7,351,855

US 5,276,013

US 5,552,391

PT 100691

CA 2073846

IE 82814

EP 523978¹

JP 3836888

EP 642798²

JP 2899111

AU 686911

AU 677710

¹ Validated in AT, BE, DK, FR, DE, GR, IT, LU, MC, NL, PT, ES, SE, CH and GB.

² Validated in AT, BE, CH, DE, DK, ES, FR, GB, GR, IE, IT, LU, NL, PT and SE. IT patent status being confirmed. See Exhibit 15.2 below.

ISSUED PATENTS

AS OF DECEMBER 8, 2008

Patent No.

CN 941939936

FI 117322³

KR 361933

NO 319084

AU 703715

JP 3188243

HK 1014240

HK 1014369

JP 3488435

CN ZL2004100621268

US 5,786,512

US 5,726,329

US 5,874,552

US 7,081,242

EP 0438259⁴

IE 82012

CA 2034197

PT 96503

AU 640730

³ Patent abandoned for failure to pay annuity. Petition to reinstate in preparation. See Exhibit 15.2 below.

⁴ Validated in AT, BE, CH, DE, DK, FR, GB, GR, IT, LU, NL, ES and SE.

ISSUED PATENTS

AS OF DECEMBER 8, 2008

Patent No.

FI 107514

NO 303940

Licensed Patents

US 6,022,544

US 6,375,951

US 6,340,460

US 5,126,131

US 7,083,959

PENDING PATENT APPLICATIONS

AS OF DECEMBER 8, 2008

Patent Application No.

US 12/100,356

CA 2171434

EP 070049655

HK 071088550

US 11/081,309

CA 2,391,944

MX PA/a/2002/005236

NO 2002-2441

EP 009922527

PENDING PATENT APPLICATIONS

AS OF DECEMBER 8, 2008

Patent Application No.

US 10/219,238

US 12/263,239

CA 2355348

US 10/748,541

US 11/562,174

US 10/814,555

US 11/565,467

US 11/373,699

Exhibit 1.26

La Jolla’s Senior Management Team

[****]

Exhibit 1.36

Product Trademarks

Mark/Serial Number/Registration Number	Country
RIQUENT Serial No: 78/102,996 Reg. No: 2,787,557	United States
RIQUENT Serial No: 78/947,249 Reg. No: 3,318,222	United States
RIQUENT Serial No: 1144359 Reg. No: TMA624679	Canada
RIQUENT Serial No: 002675601 Reg. No: 002675601	Europe *
RIQUENT Serial No: IR954406 Reg. No: IR954406	International (designating Europe) *

^* European Community Trademark Countries: Austria, Benelux (Belgium, The Netherlands & Luxembourg), Bulgaria, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Portugal, Romania, Spain, Sweden, United Kingdom, Cyprus, The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia.

Exhibit 1.41

Securities Purchase Agreement

(Filed as Exhibit 10.30 to BioMarin’s Annual Report on Form 10-K for the year ended December 31, 2008)

Exhibit 4.2B

Initial Development Plan/Budget

[****]

Exhibit 4.2E

Operating Plan/Budget Requirements

[****]

Exhibit 6.1B

Joint US Marketing Activities

[****]

Exhibit 9.1A

Manufacturing

[****]

Exhibit 11.6

Existing In-License Provisions

Pursuant to Section 2.2 of the Existing In-License (as defined in Section 1.15), BioMarin CF agrees to be bound by, and comply with, Section 5.2 of the Existing In-License, the text of which is included below and incorporated herein by reference, to the extent applicable to BioMarin CF in its capacity as a sublicensee thereunder. In addition, BioMarin CF, in its capacity as a sublicensee under the Existing In-License, specifically agrees to comply with the following provisions of the Existing In-License: (a) the confidentiality obligations under Sections 8.1 and 8.2, with respect to any confidential information of JHU disclosed to BioMarin CF; and (b) the patent acknowledgment obligations under Section 5.4 to mark all patented Products (as defined in the Existing In-License) in a manner conforming to the patent laws and practices of applicable countries. Further, pursuant to Section 9.4 of the Existing In-License, BioMarin CF, in its capacity as a sublicensee under the Existing In-License, shall become a direct licensee of JHU upon the termination of the Existing In-License.

BioMarin CF acknowledges and agrees that, pursuant to Article 4 of the Existing In-License: (i) JHU has the right to Prosecute and Maintain all La Jolla Patents covered by the Existing In-License; and La Jolla’s (and BioMarin CF’s) only rights with respect to the Prosecution and Maintenance of such Patents are to receive the information described in Section 4.1 of the Existing In-License; and (ii) the rights of BioMarin CF to enforce the La Jolla Patents covered by the Existing In-License shall be subject to the provisions of Sections 4.2, 4.3 and 4.4 of the Existing In-License.

Provisions extracted from Existing In-License

Capitalized terms in the following provisions of the Existing In-License shall have the meaning set forth in the Existing In-License.

“5.2 Records. Company shall make and retain, for a period of three (3) years following the period of each report required by Paragraph 5.1, true and accurate record, files and books of account containing all the data reasonably required for the full computation and verification of sales and other information required in Paragraph 5.1. Such books and records shall be in accordance with generally accepted accounting principles consistently applied. Company shall permit the inspection of such records, files and books of account by JHU or its independent agents reasonably acceptable to Company during regular business hours upon ten (10) business days’ written notice to Company. Such inspection shall not be made more than once each calendar year. JHU or such agents shall be under a confidentiality obligation to Company to disclose to JHU only (i) the accuracy of NET SALES and NET SERVICE REVENUES reported and the basis for royalty payments made to JHU under this Agreement, and (ii) the difference, if any, such reported and paid amounts vary from amounts determined as a result of the examination. A copy of any report prepared by such independent accounting firm shall

be delivered to Company. All costs of such inspection and copying shall be paid by JHU, provided that if any such inspection shall reveal that an error has been made in the amount equal to ten percent (10%) or more of such payment, such costs shall be borne by Company. Company shall include in any agreement with its AFFILIATED COMPANIES or its SUBLICENSEE which permits such party to make, use or sell the LICENSED PRODUCT or provide LICENSED SERVICE, a provision requiring such party to retain records of sales of LICENSED PRODUCT and records of LICENSED SERVICE and other information as required in Paragraph 5.1 and permit JHU and its independent agents reasonably acceptable to Company’s AFFILIATED COMPANIES or SUBLICENSEE to inspect such records as required by the Paragraph.”

Exhibit 15.2

Exceptions to La Jolla’s Representations and Warranties

1. La Jolla was informed by its outside annuity provider that the Italian Patent based on EP 642798 lapsed due to non-payment of a European patent post-granting fee. La Jolla’s European and Italian counsel have informed La Jolla’s patent counsel that all fees appear to have been paid and have produced an official receipt of payment for the 15^th annuity that was due by December 30, 2007 or by June 30, 2008 with a fine. Furthermore, Eponline (an electronic service associated with the European Patent Office) indicates that the Italian Patent based on EP 642798 has lapsed, which La Jolla believes is incorrect or reflects that the Italian Patent Office has not updated the listing. La Jolla’s patent counsel has instructed the European and Italian patent counsel to forward the receipt of payment of annuity to the Italian Patent Office, confirm with the Italian Patent Office that the patent is active and in good standing and to request that the Italian Patent Office correct their status data for this patent and communicate the same to the EPO register.

2. Finish patent No. 117322 was inadvertently abandoned for failure to pay a post-grant annuity. La Jolla’s patent counsel has been informed that it is possible under Finnish law to reinstate a lapsed patent if certain criteria are met. La Jolla’s patent counsel is working with Finnish patent counsel to prepare a petition to reinstate the lapsed patent.

Exhibit 15.2I

Form of Consent of Existing In-License Licensor

(See attached.)

[LJP LETTERHEAD]

December 20, 2008

VIA EMAIL AND FEDERAL EXPRESS

Andrea Doering, Ph.D., MBA

Portfolio Director

Johns Hopkins Technology Transfer

100 N Charles Street, 5th Floor

Baltimore MD 21201

Re: Exclusive License Agreement between The Johns Hopkins University (“JHU”) and La Jolla Pharmaceutical Company (“LJP”) effective as of November 25, 2002, as amended (“License Agreement”)

Dear Andrea:

As we have recently discussed, LJP is proposing to enter into a collaboration agreement with respect to LJP’s product known as RIQUENT^® with BioMarin Pharmaceutical Inc. or one of its affiliates (“BioMarin”), being the party identified as BORDEAUX in the documents that I provided to by email dated October 30, 2008. The final terms of the transaction between LJP and BioMarin are as outlined in the Development and Commercialization Agreement and the Securities Purchase Agreement that I provided to you by email dated December 20, 2008.

JHU’s consent may be required in connection with the transaction between LJP and BioMarin, and LJP hereby requests such consent. In particular, LJP requests JHU’s approval for: (a) the grant of a sublicense by LJP to BioMarin under LJP’s rights under the PATENT RIGHTS, pursuant to Section 2.2 of the License Agreement; and (b) the assignment by LJP to BioMarin, pursuant to Section 10.8 of the License Agreement, of all of LJP’s rights and obligations under the License Agreement if LJP determines that such an assignment to BioMarin is appropriate and so long as BioMarin retains rights to LJP’s product known as RIQUENT^® at the time of such assignment.

Please confirm JHU’s approval and consent to the transaction between LJP and BioMarin, including the specific items noted above, by signing, or arranging for another appropriate authorized representative of JHU to sign, the attached copy of this letter. I would appreciate if you would return one (1) original executed copy of this letter to me at the address indicated above at your earliest convenience.

JHU’s execution of this letter will also confirm JHU’s agreement to treat the documents provided to you on October 30, 2008 and December 20, 2008, as well as the contents of this letter, as confidential information of LJP and subject to the terms of Article 8 of the License Agreement.

We greatly appreciate all your assistance with this matter.

Yours sincerely,

Niv Caviar

EVP, Chief Business and Financial Officer

CONSENTED AND AGREED BY THE JOHNS HOPKINS UNIVERSITY

By:

Name:

Title:

Date:

Appendix A

Financial Appendix

[****]

EX-10.30

Exhibit 10.30

CONFIDENTIAL TREATMENT REQUESTED

Redacted Portions are indicated by [****]

LA JOLLA PHARMACEUTICAL COMPANY

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of January 4, 2009, is executed by and between La Jolla Pharmaceutical Company, a Delaware corporation (the “Company”), and BioMarin Pharmaceutical Inc., a Delaware corporation (the “Purchaser”).

RECITALS

WHEREAS, the Purchaser and the Company are parties to a Development and Commercialization Agreement dated as the date hereof relating to the development and commercialization of Riquent^® (the “Collaboration Agreement”);

WHEREAS, as partial consideration for certain obligations pursuant to the Collaboration Agreement, the Purchaser and the Company have agreed that the Company will issue and sell to the Purchaser and the Purchaser will purchase from the Company shares of the Company’s Series B-1 Convertible Preferred Stock, $0.01 par value per share, and possibly shares of the Company’s Series B-2 Convertible Preferred Stock and Series B-3 Convertible Preferred Stock, each $0.01 par value per share (the Series B-1 Convertible Preferred Stock, the Series B-2 Convertible Preferred Stock and the Series B-3 Convertible Preferred Stock being collectively referred to hereinafter as the “Series B Convertible Preferred Stock”), at such times or in connection with such events as are specified herein and in Sections 7.2-7.5 of the Collaboration Agreement;

WHEREAS, the shares of Series B Convertible Preferred Stock issued to the Purchaser shall have the rights, preferences and privileges and be convertible into shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) all as specified in each series’ applicable certificate of designation, the form of which shall be equivalent to the Certificate of Designation for the Series B-1 Convertible Preferred Stock attached hereto as Exhibit A (the “Certificate of Designation”); and

WHEREAS, the Company and the Purchaser are entering into this Agreement to reflect the terms and conditions with respect to the Purchaser’s purchase of shares of Series B Convertible Preferred Stock from the Company (any such shares as purchased by the Purchaser are hereinafter referred to as the “Shares”)).

NOW, THEREFORE, in respect of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as set forth below. Any capitalized terms that are not defined herein shall have the meaning defined for such term in the Collaboration Agreement.

AGREEMENT

SECTION 1. PURCHASE OF SHARES

1.1 Authorization of Sale. On or prior to the date of this Agreement, the Company’s Board of Directors (the “Board”) shall have authorized the sale and issuance of the Shares and the transactions contemplated by this Agreement, subject to the terms and conditions contained herein.

1.2 Purchase and Sale. Subject to the terms and conditions of this Agreement and the Collaboration Agreement, on the date hereof, the Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the Company, 3,391,035 Shares (the “Initial Investment”) at a purchase price per share of $2.21171, in the case of the Initial Closing, or, in the case of a Subsequent Closing (as defined below) at a price per common share equivalent (based on the conversion ratio provided for in the applicable Certificate of Designation, as adjusted) equal to one hundred ten percent (110%) of the average closing price of the Common Stock of the Company as reported on the NASDAQ stock market or such other reporting service as the stock is then quoted if not then quoted on NASDAQ (and if not then traded at the value determined by an investment bank selected consistent with the provisions of Section 14.3 of the Collaboration Agreement), for the ten (10) consecutive trading days commencing five (5) trading days immediately prior to the date the Company has publicly announced the event that triggered such payment (i.e., the P-Value Achievement, or in the case of such payment where there is no P-Value Achievement, the Company’s first public announcement of the results of the Second Interim Efficacy Analysis or the first public announcement of the approval of an NDA for the Product under Section 7.13 of the Collaboration Agreement (the “Announcement of Results”)). Notwithstanding the foregoing, in no event will the price per common share equivalent for the Shares issued in a Subsequent Closing (based on the conversion ratio provided for in the applicable Certificate of Designation, as adjusted) be less than $0.73724.

1.3 Purchase and Sale of Additional Shares.

(A) The Company has granted the Purchaser the right to purchase shares of Series B-2 Convertible Preferred Stock and Series B-3 Convertible Preferred Stock pursuant to the Collaboration Agreement. If the Purchaser exercises its right to purchase such additional Shares then, subject to the terms and conditions of this Agreement, the Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the Company, that number of Shares determined by dividing the amount of the dollar investment by the Purchaser by the purchase price per share calculated in accordance with Section 1.2 of this Agreement. Each closing relating to the

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purchase of Shares following the Initial Closing shall be defined herein as a “Subsequent Closing,” and the Initial Closing and the Subsequent Closings shall be defined herein as the “Closings.”

(B) Notwithstanding anything to the contrary set forth in subsection 1.3(A), if the number of Shares agreed to be purchased by the Purchaser at any Subsequent Closing, when coupled with all other shares of Series B Convertible Preferred Stock owned by the Purchaser, would exceed the maximum number of Shares allowed by NASDAQ Marketplace Rule 4350(i)(1)(B) without the approval of a majority of the total votes cast on the proposal by the stockholders of the Company, and such stockholder approval has not yet been obtained prior to such Subsequent Closing then at the relevant Closing, the Purchaser shall only be obligated to purchase that number of Shares permissible without stockholder approval under NASDAQ Marketplace Rule 4350(i)(1)(B). The Purchaser shall thereafter be obligated to purchase any Shares originally agreed to be purchased but not so purchased at such Closing due to the provisions of the previous sentence, subject to reduction as provided for in the next sentence, as promptly as practicable following such time as stockholder approval has been obtained by the Company (but in no event later than thirty (30) days following such approval). If the Company’s stockholders do not approve all purchases of Shares in accordance with NASDAQ Marketplace Rule 4350(i)(1)(B) on or before July 1, 2009, then any pending or future obligations to purchase Shares under this Agreement in excess of the maximum number of shares allowable under NASDAQ Marketplace Rule 4350(i)(1)(B) without stockholder approval shall be terminated or disallowed and the amounts payable to the Company under Sections 7.2, 7.3, 7.4 and 7.13 of the Collaboration Agreement shall be correspondingly reduced by the amount of money the Purchaser was entitled to invest in the Company but could not due to the limitations imposed by NASDAQ Marketplace Rule 4350(i)(1)(B) without any further obligation of the Purchaser to provide such monies to the Company. By way of example, if under Section 7.3(a)(ii)(x) of the Collaboration Agreement the Purchaser receives notice of a Non-Futile Determination and the Purchaser determines to continue its participation under the Collaboration Agreement by paying to the Company $22,500,000, including $5,000,000 in the form of an equity investment, but because the Company has not yet received stockholder approval under NASDAQ Marketplace Rule 4350(i)(1)(B), the Purchaser can only purchase $3,000,000 of Shares, then the Purchaser shall purchase the $3,000,000 of Shares and the Purchaser’s obligation to purchase the additional $2,000,000 of Shares shall be deferred until such stockholder approval is obtained. Notwithstanding the foregoing, if such stockholder approval is not obtained by July 1, 2009, then the Purchaser’s obligation under Section 7.3(a)(ii)(x) of the Collaboration Agreement shall be reduced from $22,500,000 to $20,500,000 and the Purchaser shall have been deemed to satisfy in full its payment obligation to the Company under such provision and if thereafter under Section 7.4 of the Collaboration Agreement the Purchaser receives notice of a P-Value Achievement, the Purchaser’s payment obligation shall be reduced from $55,000,000 to $40,000,000 and the right to pay a portion of such amount by making an equity investment shall be extinguished.

SECTION 2. CLOSING, DELIVERY AND PAYMENT

2.1 Initial Closing. The initial closing of the sale and purchase of the Initial Investment (the “Initial Closing”) shall take place on January 20, 2009, at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, California 94304, or at such other time or place, if any, as the Company and the Purchaser may mutually agree. As used

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herein, a “Business Day” means any day which is not (i) a Saturday or a Sunday, or (ii) a day on which banking institutions in California are authorized or obligated by law or regulation to close, and the “Closing Date” shall mean the date on which the applicable Closing, takes place.

2.2 Subsequent Closings. In accordance with the Collaboration Agreement, if any Subsequent Closing occurs, the purchase and sale of that number of Shares calculated in accordance with Section 7.5 of the Collaboration Agreement shall take place at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, California 94304 within fifteen (15) Business Days (subject to the closing conditions in Section 5 being satisfied) following receipt by the Company of the written notice specified in Section 7.5 of the Collaboration Agreement, or at such other place and/or time, if any, as the Company and the Purchaser may mutually agree.

2.3 Delivery. At each Closing, subject to the terms and conditions hereof, the Company will deliver to the Purchaser a certificate representing the number of Shares to be purchased by the Purchaser, against payment of the purchase price therefor in immediately available funds by check or wire transfer to an account designated by the Company.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

As a material inducement to the Purchaser to enter into and perform its obligations under this Agreement, the Company hereby represents and warrants to the Purchaser as of the date hereof, and with respect to a Subsequent Closing, as of the Closing Date thereof (except for representations and warranties that speak only as of a specific date (which shall true and correct as of such date)), as follows:

3.1 Organization and Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority to conduct its business as currently conducted and to enter into and perform this Agreement, to issue Shares being purchased by the Purchaser at each Closing and to carry out the transactions contemplated by this Agreement. The Company is duly qualified or otherwise authorized to do business as a foreign corporation or other organization and is in good standing as such in every jurisdiction in which the failure to so qualify would (i) have a material adverse effect on the business, assets, liabilities (contingent or otherwise), operations, condition (financial or otherwise) and results of operations of the Company and the Subsidiary, taken as a whole, or (ii) prevent or adversely affect the enforceability or binding effect of this Agreement or the ability of the Company to perform its obligations under this Agreement (a “Company Material Adverse Effect”).

3.2 Subsidiary. As of the date hereof, the Company has one wholly-owned subsidiary, La Jolla Limited (the “Subsidiary”), which is incorporated in England. All of the outstanding shares of capital stock of the Subsidiary and any other subsidiary established by the Company after the date hereof are duly and validly authorized, are validly issued and are fully paid and nonassessable, have been offered, issued, sold and delivered in compliance in all material respects with applicable foreign, federal and state securities laws, and are owned by the Company free and clear of any Security Interest (as defined below).

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3.3 Issuance of Shares. The issuance, sale and delivery of all Shares to be sold by the Company at each Closing (only with respect to Shares issued in such Closing) in accordance with this Agreement have been duly authorized by all necessary corporate action on the part of the Company. Each Share when issued, sold and delivered in accordance with the provisions of this Agreement will be duly and validly issued, fully paid and nonassessable, free of all liens, claims and encumbrances and will not be issued in violation of any co-sale, right of first refusal, preemptive rights or any other similar rights of stockholders. The Company has reserved from its duly authorized capital stock a number of shares of Common Stock at least equal to the amount of Common Stock issuable upon conversion of the Shares (only with respect to Shares issued in such Closing) in accordance with the terms specified in the Certificate of Designation applicable to such Shares. Additionally, as of the Initial Closing, the Company has reserved from its duly authorized capital stock 37,301,387 shares of Common Stock that may be issued upon conversion of the Shares purchased at the Initial Closing as well as Shares that may be issued at any Subsequent Closing (based upon an assumed issue price equal to the floor price established in Section 1.2).

3.4 Authority for Agreement. The Company has full corporate power and authority to execute and deliver this Agreement, to issue all Shares being purchased by the Purchaser at each Closing (only with respect to Shares issued in such Closing) and to perform its other obligations hereunder and thereunder. The execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action by the Company and, when executed and delivered by the Company, this Agreement will be the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

3.5 No Conflict. The execution, delivery and performance of this Agreement, the issuance of all Shares being purchased by the Purchaser at each Closing (only with respect to Shares issued in such Closing) and the consummation of the other transactions contemplated hereby by the Company including the conversion of the Shares into shares of Common Stock will not (a) conflict with or violate any provision of the Company’s Certificate of Incorporation (as currently in effect, the “Certificate”) or its corporate By-laws (as currently in effect, the “By-Laws”), or (b) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice, consent or waiver under, any material contract, lease, sublease, license, sublicense, franchise, permit, indenture, agreement or mortgage for borrowed money, instrument of indebtedness, Security Interest (as defined below) or other material arrangement to which the Company or the Subsidiary is a party. For purposes of this Agreement, “Security Interest” means any mortgage, pledge, security interest, encumbrance, charge, lien or similar right (whether arising by contract or by operation of law).

3.6 Consents. No consent, permit, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any court, arbitrational tribunal, administrative agency or commission or other governmental or regulatory authority or agency, including any Self-Regulatory Organization (including NASDAQ) (each of the foregoing is hereafter referred to as a “Governmental Entity”) or any other Person is required to be made or obtained by the Company or any of its subsidiaries in connection with the offer, issuance, sale and delivery of all Shares being

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purchased by the Purchaser in each Closing (only with respect to Shares issued at such Closing) or the other transactions to be consummated hereunder, as contemplated by this Agreement, including the conversion of the Shares into shares of Common Stock, except for any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”), such filings as shall have been made prior to and shall be effective on and as of the Initial Closing, and with respect to a Subsequent Closing, as of the Closing Date thereof, and such filings required to be made after the Initial Closing, and with respect to a Subsequent Closing, after the Closing Date thereof, under applicable federal and state securities laws. Based in part on the representations made by the Purchaser in Section 4 of this Agreement, the offer and sale of Shares to the Purchaser will be in compliance with applicable federal and state securities laws.

3.7 No Solicitation or Advertisement. Neither the Company nor the Subsidiary nor any person acting on their behalf has engaged, in connection with the offering or sale of Shares, in any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act, as defined below.

3.8 Securities Act Registration. Assuming that the representations and warranties of the Purchaser contained herein are true, it is not necessary in connection with the offer, sale and delivery of Shares, in the manner contemplated by this Agreement to register the Shares under the Securities Act of 1933, as amended (the “Securities Act”) or under applicable state securities or Blue Sky laws regulating the issuance or sale of securities.

3.9 Capitalization. As of the date hereof, the authorized capital stock of the Company consists of 225,000,000 shares of Common Stock and 8,000,000 shares of Preferred Stock. As of September 30, 2008, the issued and outstanding capital stock of the Company consists of 55,421,634 shares of Common Stock. The shares of issued and outstanding capital stock of the Company have been duly authorized and validly issued, are fully paid and nonassessable and have not been issued in violation of any state or federal laws, rules or regulations, or in violation of (and are not otherwise subject to) any preemptive or other similar rights. Options and warrants to purchase an aggregate of 14,061,010 shares of Common Stock were outstanding as of September 30, 2008. Except as disclosed in or contemplated by the SEC Filings, as defined below, the Company does not have outstanding any options to purchase, or any preemptive rights or other rights to subscribe for or to purchase, any securities or obligations convertible into, or any contracts or commitments to issue or sell, shares of its capital stock or any such options, rights, convertible securities or obligations other than options granted under the Company’s stock option plans.

3.10 SEC Filings. The Company is a reporting company and has filed all reports required to be filed by it under the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including pursuant to Section 13(a), 14(a) or 15(d) thereof, or the rules and regulations thereunder, for the three years preceding the date hereof (the foregoing materials and any materials incorporated therein by reference being collectively referred to herein as the “SEC Filings”) on a timely basis or has received a valid extension of such time of filing or waiver thereof and has filed any such SEC Filings prior to the expiration of any such extension. As of their respective dates, the SEC Filings complied in all material respects with the requirements of the Exchange Act and the Securities Act and the rules and regulations of the SEC promulgated

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thereunder, and none of the SEC Filings, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The SEC Filings, for purposes of all representations in this Section 3 as of a Subsequent Closing, shall include all filings filed by the Company with the SEC up to and including the date on which the Announcement of Results occurs.

3.11 Financial Statements. The financial statements filed with the SEC as a part of the SEC Filings present fairly, in all material respects, the financial position of the Company and its consolidated subsidiaries as of and at the dates indicated and the results of their operations and cash flows for the periods specified therein, subject, in the case of interim financial statements, to the normal year-end adjustments which are not expected to be material in amount. Such financial statements have been prepared in conformity with generally accepted accounting principles as applied in the United States and in effect as of the date of the applicable financial statements and supporting schedules, as applicable, applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto, and comply in all material respects with the Securities Act, the Exchange Act and the applicable rules and regulations of the SEC thereunder. Except as set forth in such financial statements included in the SEC Filings filed prior to the date hereof, neither the Company nor the Subsidiary has incurred any liabilities, contingent or otherwise, except those incurred in the ordinary course of business consistent with past practice, none of which ordinary course liabilities, individually or in the aggregate, would reasonably be expected to result in a Company Material Adverse Effect.

3.12 Eligibility for Form S-3. The Company represents and warrants that on the date hereof the Company meets the requirements for the use of Form S-3 for registration of the sale by the Purchaser of all Shares being purchased by the Purchaser hereunder and the Company has filed all reports required to be filed by the Company with the SEC in a timely manner so as to obtain eligibility for the use of Form S-3.

3.13 No Change. Since the filing with the SEC of the Company’s most recently filed quarterly report on Form 10-Q or annual report on Form 10-K, or with respect to the Initial Closing, as set forth on Schedule 3.13, (i) the Company has not incurred any material liabilities or material obligations, indirect, or contingent, or entered into any material oral or written agreement or other transaction which is not in the ordinary course of business and which could reasonably be expected to result in a Company Material Adverse Effect; (ii) the Company has not sustained any material loss or interference with its businesses or properties; (iii) the Company has not paid or declared any dividends or other distributions with respect to its capital stock; (iv) the Company and the Subsidiary are not in default in the payment of principal or interest on any outstanding debt obligations; (v) there has not been any change in the capital stock of the Company other than the sale of Shares hereunder and shares or options issued pursuant to the Company’s stock option plan or employee stock purchase plan and any options outstanding as of the date hereof, or indebtedness, liens or claims (other than in the ordinary course of business); (vi) the Company has not experienced any loss of the services of any key employee or material change in the composition or duties of the senior management of the Company or the Subsidiary; (vii) the Company has not made any material change to its methods of accounting; and (viii) neither the Company nor the Subsidiary has experienced any other event or condition of any character that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect.

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3.14 No Actions. Except as disclosed in the SEC Filings, (i) there are no legal or governmental actions, suits, claims, investigations or proceedings pending or threatened to which the Company or the Subsidiary is or may be a part or of which property owned or leased by the Company or the Subsidiary is or may be the subject, or related to environmental or discrimination matters, which actions, suits or proceedings, individually or in the aggregate, might prevent or might reasonably be expected to materially and adversely affect the transactions contemplated by this Agreement; and (ii) no labor disturbance by the employees of the Company or the Subsidiary exists, or is threatened which would reasonably be expected to result in a Company Material Adverse Effect. Except as disclosed in the SEC Filings, neither the Company nor the Subsidiary is a party to or subject to the provisions of any injunction, judgment, decree or order of any court, regulatory body administrative agency or other governmental body which could reasonably be expected to result in a Company Material Adverse Effect.

3.15 Compliance. To the Company’s knowledge, except as disclosed in the SEC Filings, the Company and the Subsidiary have been and are conducting their respective businesses in compliance with all applicable laws, rules and regulations of the jurisdictions in which they are each conducting business, including, without limitation, all applicable local, state, federal and foreign drug or environmental laws and regulations, the violation of which could reasonably be expected to result in a Company Material Adverse Effect. Neither the Company nor the Subsidiary is in violation of any order of any court, arbitrator or governmental body. The Company is in compliance with the applicable requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations thereunder, except where such noncompliance would not have or reasonably be expected to result in a Company Material Adverse Effect.

3.16 Intellectual Property. Except as disclosed in the SEC Filings, (i) the Company believes it owns or possesses the necessary trademarks, trademark applications, service marks, service names, trade name rights, patents, patent rights, patent applications, copyrights, licenses, know-how, trade secrets and other intellectual property rights (the “Intellectual Property”) to enable it to conduct its business as it is being conducted as of the date hereof and as specifically described in the SEC Filings and to enter into and perform its obligations under the Collaboration Agreement; and (ii) the Company has no knowledge of any infringement by it of any trademark, trade name rights, patent rights, copyrights, trade secret or any other intellectual property rights of third parties, or of any claim made against the Company regarding any such an infringement, and no third party, to the Company’s knowledge, is infringing the Intellectual Property, in each case, which could reasonably be expected to result in a Company Material Adverse Effect. Except as disclosed in the SEC Filings, there are no material options, licenses or agreements relating to the Intellectual Property, nor is the Company bound by or a party to any options, licenses or agreements relating to the patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names, trade names or copyrights or other intellectual property rights of any other Person. As of the date hereof, there is no claim, action or proceeding pending or, to the Company’s knowledge, threatened, that challenges the right of the Company with respect to any Intellectual Property.

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3.17 Listed Securities. As of the date hereof, the Common Stock of the Company is quoted on the Nasdaq Global Market and the Company has not received any written notice with respect to the delisting of its Common Stock from NASDAQ. The Company will continue to use commercially reasonable efforts to comply with all quantitative and qualitative requirements of the NASDAQ Marketplace Rules to the extent such compliance is within the control of the Company.

3.18 No Integrated Offering. Neither the Company nor any Person acting on its behalf has, directly or indirectly, made any offers or sales of any Company security or solicited any offers to buy any security, under circumstances that would adversely affect reliance by the Company on Regulation D or Section 4(2) of the Securities Act for the exemption from registration for the transactions contemplated hereby or would require registration of any Shares under the Securities Act or would be integrated under the NASDAQ Marketplace Rules.

3.19 Investment Company. The Company is not an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for an investment company, within the meaning of the Investment Company Act of 1940, as amended.

3.20 Full Disclosure. All representations and warranties of the Company and all statements, schedules or certificates furnished by or on behalf of the Company to the Purchaser or its agents pursuant to this Agreement, the Collaboration Agreement or in connection with the transactions contemplated hereby and thereby, are true and correct in all material respects and do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.

3.21 Waiver with Respect to Rights Plan. The Company has waived the application of that certain Rights Agreement dated as of December 2, 2008 by and between the Company and American Stock Transfer & Trust Company, LLC (the “Rights Plan”) to any acquisition by the Purchaser of securities of the Company pursuant to this Agreement in any Closing.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser hereby represents and warrants to the Company as follows:

4.1 Investment. The Purchaser is acquiring Shares for its own account, for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same; and the Purchaser has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition thereof. The Purchaser is an “accredited investor” as defined in Rule 501(a) under the Securities Act.

4.2 Authority. The Purchaser has full corporate power and authority to execute and deliver this Agreement and to perform its other obligations hereunder. The execution, delivery and performance by the Purchaser of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action by the Purchaser and, when executed and delivered by the Purchaser, this Agreement will be the valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms.

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4.3 Experience. The Purchaser has made inquiry concerning the Company, its business and its personnel and the Purchaser has sufficient knowledge and experience in finance and business that it is capable of evaluating the risks and merits of its investment in the Company and the Purchaser is able financially to bear the risks thereof. The Purchaser acknowledges that an investment in the Company has a high degree of risk.

4.4 Restricted Shares. The Purchaser understands that (a) the Shares (and the shares of Common Stock underlying the Shares) have not been registered under the Securities Act by reason of their issuance in a transaction exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Regulation D promulgated under the Securities Act, (b) the Shares (and the shares of Common Stock underlying the Shares) must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration and (c) the Company will make a notation on its transfer books to such effect. The Purchaser represents that it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act. The Purchaser acknowledges that the Shares (and the shares of Common Stock underlying the Shares) have not been registered under the Securities Act or qualified under any applicable blue sky laws in reliance, in part, on the representations and warranties herein.

4.5 Legend. The Purchaser understands that any certificates evidencing the Shares or the shares of Common Stock into which the Shares are converted may bear the following legend:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.”

The legend set forth above shall be removed and the Company hereby agrees to issue the Shares (and the shares of Common Stock underlying the Shares) without such legends to the holder thereof, (i) if such Shares (and the shares of Common Stock underlying the Shares) are registered for resale under the Securities Act, (ii) if such holder provides the Company with an opinion of counsel or other evidence reasonably acceptable to the Company to the effect that a public sale, assignment or transfer of such Shares (and the shares of Common Stock underlying the Shares) may be made without registration under the Securities Act, or (iii) upon expiration of the applicable period under Rule 144(k) of the Securities Act (or any successor rule).

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4.6 Organization and Standing. The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of formation and has full corporate power and authority to enter into and perform this Agreement, and to carry out the transactions contemplated by this Agreement.

SECTION 5. CONDITIONS TO CLOSING

5.1 Conditions to the Purchaser’s Obligation to Close. The obligation of the Purchaser to purchase Shares at a Closing is subject to the fulfillment or the waiver, of each of the following conditions on or before the applicable Closing:

(A) The representations and warranties contained in Section 3 shall be true and correct on and as of the applicable Closing Date except for representations and warranties that speak only as of a specific date (which shall be true and correct as of such date).

(B) The Company shall have delivered to the Purchaser: (i) certificates, as of a recent practicable date, as to the corporate good standing of the Company issued by the Secretaries of State of the States of Delaware and California and the Secretary of each other State in which the Company is qualified to do business, (ii) a certificate executed by its Chief Executive Officer or Chief Financial Officer, dated as of the applicable Closing Date, to the effect that the representations and warranties of the Company set forth in Section 3 hereof are true and correct in all respects on and as of the applicable Closing Date (except for representations and warranties that speak only as of a specific date (which shall be true and correct as of such date)) and that the Company has otherwise complied in all material respects with all of its obligations under this Agreement and the Collaboration Agreement, and (iii) a certificate of the Secretary or Assistant Secretary of the Company, dated as of the applicable Closing Date, certifying as to (a) the By-Laws of the Company, (b) the signatures and titles of the officers of the Company executing this Agreement, and (c) resolutions of the Board of the Company, authorizing and approving all matters in connection with this Agreement which have not been revoked.

(C) The satisfaction, at or prior to the applicable Closing, of all applicable requirements of the HSR Act, including the expiration or early termination of any HSR Act waiting period, if any.

(D) The Company shall have delivered to the Purchaser an opinion of counsel, dated as of the applicable Closing Date, in the form attached hereto as Exhibit B.

(E) The Collaboration Agreement shall not have terminated effective as of the date of such Closing.

5.2 Conditions to the Company’s Obligation to Close. The obligation of the Company to sell any Shares to the Purchaser under this Agreement is subject to fulfillment, or the waiver in writing by the Company, of the following conditions on or before the applicable Closing:

(A) The representations and warranties of the Purchaser contained in Section 4 shall be true and correct in all respects except for representations and warranties that speak only as of a specific date (which shall be true and correct as of such date).

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(B) The Purchaser shall have delivered to the Company a certificate executed by its Chief Executive Officer or Chief Financial Officer, dated as of the applicable Closing Date, to the effect that the representations and warranties of the Purchaser set forth in Section 4 hereof are true and correct on and as of the applicable Closing Date (except for representations and warranties that speak only as of a specific date (which shall be true and correct as of such date)) and that the Purchaser has otherwise complied in all material respects with all of its obligations under this Agreement and the Collaboration Agreement.

(C) The satisfaction, at or prior to the applicable Closing, of all applicable requirements of the HSR Act, including the expiration or early termination of any HSR Act waiting period, if any.

(D) The Collaboration Agreement shall not have terminated effective as of the date of such Closing.

SECTION 6. REGISTRATION RIGHTS

6.1 Demand Registration.

(A) Subject to subsection (C) hereof, if the Company receives a written request from the Purchaser that the Company effect any registration with respect to all or a part of the shares of Common Stock issuable upon conversion of the Shares that are held by the Purchaser and/or its controlled Affiliates (such shares, to the extent that the registration of such number of Shares is permitted pursuant to then applicable rules, regulations and staff guidance of the SEC) are hereinafter referred to as “Registrable Securities”), the Company shall:

(1) As soon as practicable, but in no event later than ninety (90) days following the receipt of such request, prepare and file with the SEC a registration statement on Form S-3 (the “Registration Statement”) relating to the resale of Registrable Securities by the Purchaser from time to time through the automated quotation system of NASDAQ or the facilities of any national securities exchange or trading system on which the Common Stock of the Company is then traded or in privately negotiated transactions;

(2) Subject to receipt of necessary information from the Purchaser, use commercially reasonable efforts to cause the SEC to notify the Company of its willingness to declare the Registration Statement effective within ninety (90) days after the Registration Statement is filed by the Company, and notify the Purchaser of such notification from the SEC within three (3) Business Days of receipt;

(3) Promptly prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep each Registration Statement effective until the earlier of (i) 120 days following the date on which the registration first became effective, or (ii) such time as all Registrable Securities held by the Purchaser have been sold pursuant to a registration statement (the “Registration Period”);

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(4) So long as the Registration Statement is effective covering the resale of Registrable Securities owned by the Purchaser, furnish to the Purchaser with respect to the Common Stock registered under the Registration Statement such reasonable number of copies of prospectuses and such other documents as the Purchaser may reasonably request, in order to facilitate the public sale or other disposition of all or any Registrable Securities by the Purchaser;

(5) File documents required of the Company for normal blue sky clearance in states specified in writing by the Purchaser; provided, however, that the company shall not be required to qualify to do business in any jurisdiction in which it is not now so qualified;

(6) Bear all expenses in connection with the procedures in subsection (A) of this Section 6.1 and the registration of Registrable Securities pursuant to the Registration Statement; and

(7) Notwithstanding the foregoing, (i) the Company shall not be obligated to effect a registration pursuant to this Section 6.1 during the period starting with the date sixty (60) days prior to the Company’s estimated date of filing of, and ending on a date sixty (60) days following the effective date of, a registration statement pertaining to an underwritten public offering of the Company’s securities, provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective and that the Company’s estimate of the date of filing such registration statement is made in good faith, and (ii) if the Company shall furnish to the Purchaser a certificate signed by the Chief Executive Officer of the Company stating that in the good faith judgment of the Board it would be seriously detrimental to the Company or its stockholders for a registration statement to be filed in the near future, then the Company’s obligation to use its best efforts to file a registration statement shall be deferred for a period not to exceed one hundred twenty (120) days.

(8) If the Purchaser intends to distribute Registrable Securities covered by its demand by means of an underwriting, it shall so advise the Company as part of its demand made pursuant to this Section 6.1. The Company shall, together with the Purchaser, enter into an underwriting agreement in customary form with the underwriter or underwriters selected by the Purchaser and reasonably satisfactory to the Company. If the underwriter has not limited the number of Registrable Securities to be underwritten, the Company may include securities for its own account (or for the account of other stockholders) in such registration if the underwriter so agrees and if the number of Registrable Securities that would otherwise have been included in such registration and underwriting will not thereby be limited.

(9) The Company shall enter into all such agreements (including without limitation an underwriting agreement) and perform all such actions as is customary for a company to facilitate the sale of its securities pursuant to registration rights.

(B) With a view to making available to the Purchaser the benefits of Rule 144 under the Securities Act (“Rule 144”) (or its successor rule) and any other rule or regulation of the SEC that may at any time permit the Purchaser to sell Registrable Securities to the public without registration, the Company covenants and agrees to: (i) make and keep public information available,

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as those terms are understood and defined in Rule 144, until such date as all of the Purchaser’s Registrable Securities shall have been resold; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and under the Exchange Act; and (iii) furnish to the Purchaser upon request, as long as the Purchaser owns any Registrable Securities, (x) a written statement by the Company that it has complied in all material respects with the reporting requirements of the Securities Act and the Exchange Act, and (y) such other information as may be reasonably requested in order to avail the Purchaser of any rule or regulation of the SEC that permits the selling of such Registrable Securities without registration.

(C) The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to this Section 6.1:

(1) During the period commencing on the date of execution of the Collaboration Agreement and continuing until the earlier to occur of (1) the Release Date (as defined in Section 7.1), (2) the date of the Announcement of Results, or (3) if the Collaboration Agreement is terminated by the Purchaser for any reason, the effective date of such termination;

(2) During the one hundred eighty (180) day period following the effective date of the first Registration Statement filed pursuant to this Section 6.1; provided that if the number of shares of Common Stock are limited pursuant to Section 6.1(A), the Purchaser may require an additional registration as soon as such additional registration would be legally permissible;

(3) After the Purchaser has made two (2) demands for registration pursuant to this Section 6.1, and such demands have been declared or ordered effective by the SEC; provided that the Purchaser may require an additional registration for each time the number of shares of Common Stock registered are limited pursuant to Section 6.1(A); or

(4) If the Purchaser holds five percent (5%) or less of the outstanding Common Stock of the Company (calculated based on the number of shares held by the Purchaser and its Controlled Affiliates and the number of shares of Common Stock into which Shares held by the Purchaser and its Controlled Affiliates are convertible), after the date on which the Purchaser is able to immediately sell all Registrable Securities held or entitled to be held by the Purchaser under Rule 144.

6.2 Piggy-Back Registration.

(A) So long as the Purchaser holds more than five percent (5%) (measured on an as-converted to common stock basis) of the outstanding Common Stock (calculated based on the number of shares held by the Purchaser and its Controlled Affiliates and the number of shares of Common Stock into which Shares held by the Purchaser and its Controlled Affiliates are convertible), if the Company proposes to file with the SEC a registration statement relating to an offering of any of its securities for its own account or the account of security holders exercising their demand registration rights (other than on Form S-4 or Form S-8 or their then equivalents relating to securities to be issued solely in connection with an acquisition of any entity or business or equity

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securities issuable in connection with stock option or other employee benefit plans), the Company shall promptly send to the Purchaser written notice of the Company’s intention to file such a registration statement and of the Purchaser’s rights under this Section 6.2 and, if within fifteen (15) days after receipt of such notice, the Purchaser shall so request in writing, the Company shall include in such registration statement all or any Registrable Securities the Purchaser requests to be registered. No right to registration of Registrable Securities under this Section 6.2 shall be construed to limit any registration rights granted under Section 6.1.

(B) The Company shall bear and pay all expenses incurred in connection with any registration, filing or qualification of Registrable Securities to be registered pursuant to this Section 6.2, including all registration, filing, qualification, printing and accounting fees relating or apportionable thereto, and the reasonable fees and expenses of counsel for the Purchaser not to exceed $10,000 per registration.

(C) If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so indicate in the notice given pursuant to this Section 6.2. In such event the right of the Purchaser to registration pursuant to this Section 6.2 shall be conditioned upon the Purchaser’s agreeing to participate in such underwriting and in the inclusion of the Purchaser’s Registrable Securities in the underwriting to the extent provided herein. The Purchaser shall (together with the Company and the other holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company or by other holders exercising any demand registration rights. Notwithstanding any other provision of this Section 6.2, if the underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may exclude some or all Registrable Securities or other securities from such registration and underwriting (hereinafter an “Underwriter Cutback”). In the event of an Underwriter Cutback, the Company shall so advise the Purchaser and the other holders distributing their securities through such underwriting, and the number of shares that may be included in the registration and the underwriting shall be allocated in proportion, as nearly as practicable, to the respective amounts of shares of Common Stock held by the Purchaser and such other holders distributing their securities through the underwriting. If the Purchaser disapproves of the terms of any such underwriting, the Purchaser may elect to withdraw therefrom by written notice to the Company and the underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.

6.3 Indemnification.

In the event any Registrable Securities are included in a Registration Statement under this Section 6:

(A) To the extent permitted by law, the Company will indemnify and hold harmless the Purchaser, each of the Purchaser’s officers, directors and agents, each person who participates in the offering of Registrable Securities, including underwriters (as defined in the Securities Act) and each person, if any, who controls the Purchaser (or other participating person) within the meaning of the Securities Act, or the Exchange Act, against any losses, claims, damages,

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or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “Violation”): (i) any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, including any information deemed to be a part thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A of the Rules and Regulations under the Securities Act, or the prospectus, in the form first filed with the SEC pursuant to Rule 424(b) of the Rules and Regulations under the Securities Act, or filed as part of such Registration Statement at the time of effectiveness if no Rule 424(b) filing is required (the “Prospectus”), or any amendment or supplement thereto, (ii) the omission or alleged omission to state a material fact required to be stated in such Registration Statement or necessary to make the statements in such Registration Statement not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, or the Exchange Act, or any state securities law; and the Company will pay to the Purchaser or controlling person, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action promptly as such expenses are incurred; provided, however, that the indemnity agreement contained in this subsection 6.3(A) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld or delayed), nor shall the Company be liable in any such case for any such loss, claim, damage, liability, or action to the extent that it solely arises out of or is based upon the Company’s reliance upon written information furnished expressly for use in connection with such registration by the Purchaser or an officer, director or agent thereof;

(B) To the extent permitted by law, the Purchaser will, if Registrable Securities held by the Purchaser are included in the registration, indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement and each person who controls the Company within the meaning of the Securities Act (and subject to any underwriting or other separate agreement wherein the Purchaser may agree to indemnify an underwriter, such underwriter), against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Securities Act, the Exchange Act, or other federal, state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon the Company’s reliance upon written information furnished by the Purchaser expressly for use in connection with such registration; and the Purchaser will pay, as incurred, any legal or other expenses reasonably incurred by the Company, in connection with investigating or defending any such loss, claim, damage, liability, or action; provided however, that the indemnity agreement contained in this subsection 6.3(B) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Purchaser, which consent shall not be unreasonably withheld or delayed; provided, further, that the amount of the indemnity shall be limited to the proceeds of sale received by the Purchaser unless such indemnity obligation arises from the Purchaser’s commission of fraud or intentional misrepresentation;

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(C) Promptly after receipt by an indemnified party under this Section 6.3 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 6.3, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 6.3, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 6.3;

(D) If the indemnification provided for in this Section 6.3 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage, or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; and

(E) The obligations of the Company and the Purchaser under this Section 6.3 shall survive the completion of any offering of Registrable Securities in a registration statement, as applicable, under this Section 6.3, and otherwise.

6.4 Further Obligations. The Company shall be required to take such other further actions as are customary in connection with the registration obligations of the Company pursuant to this Section 6.

SECTION 7. CERTAIN COVENANTS

7.1 Restriction on Sale.[****] .

7.2 Dissenters Rights. [****].

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7.3 Lock-Up Agreement. Subject to the Company complying with Section 6.2, the Purchaser hereby agrees that the Purchaser and its Controlled Affiliates shall not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of in any manner, either directly or indirectly, or otherwise transfer any Shares or shares of Common Stock held by them (other than those included in a registration) during the one hundred eighty (180) day period following the effective date of the any registration statement involving a public offering of the Company’s securities filed under the Securities Act, provided that all Section 16(b) reporting officers and directors of the Company, and holders of at least ten percent (10%) of the Company’s voting securities (who are affiliates of the Company) (collectively, the “Lock-Up Persons”) are bound by and have entered into similar agreements; and provided further that the lock-up agreed to hereby shall expire if during the term of the lock-up any other Lock-Up Person is released from his, her or its lock-up obligations with respect to any security of the Company. The obligations described in this Section 7.3 shall not apply to a registration relating solely to employee benefit plans on Form S-l or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions and may stamp each such certificate with the second legend with respect to the Shares (or shares of Common Stock into which the Shares are converted) subject to the foregoing restriction until the end of such one hundred eighty (180) day period. The Purchaser agrees to execute (and cause any applicable Controlled Affiliates to execute) a market standoff agreement with said underwriters in customary form consistent with the provisions hereof.

7.4 Stockholder Vote. The Company shall take all appropriate and necessary action to seek the approval of its stockholders by July 1, 2009, whether at the 2009 annual meeting or otherwise, of the issuance to the Purchaser of Shares in excess of limitations placed on such issuances under NASDAQ Marketplace Rule 4350(i)(1)(B) without such stockholder approval.

SECTION 8. RIGHT TO PARTICIPATE IN FUTURE SALES OR ISSUANCES OF COMMON STOCK

8.1 The Company hereby grants the Purchaser a right to participate with respect to any sale or issuance by the Company after the date hereof of any shares of, or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (collectively, the “Additional Stock”); provided that “Additional Stock” does not include any (i) shares of Common Stock (or options therefor) issued to officers, directors or employees of, or consultants to, the Company pursuant to Company stock plans or agreements on terms approved by the Board of Directors; provided that such securities are issued under compensation plans that have been approved by the Company’s stockholders and are awarded solely for compensation for serving as such officer, director, employee or consultant; (ii) shares of Common Stock, or options or warrants to purchase Common Stock, issued pursuant to joint ventures, technology licensing or research and development activities; or (iii) shares of Common Stock, or options or warrants to purchase Common Stock, issued in connection with bona fide acquisitions, mergers or similar transactions; and provided further that such right to participate shall only apply if, at the time of such offering of Additional Stock, the Purchaser holds ten percent (10 %) or more of the outstanding Common Stock of the Company (calculated based on the number of

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outstanding shares of Common Stock without conversion of outstanding options or warrants and taking into account the number of shares of Common Stock into which Shares held by the Purchaser and its Controlled Affiliates are convertible as being shares of Common Stock beneficially owned by the Purchaser and its Controlled Affiliates). If the Company proposes to offer Additional Stock to a third party prior to the earlier of (i) termination of the Collaboration Agreement or (ii) the first date on which Purchaser has transferred any Shares to any third party, the Company shall also make an offering of the Additional Stock to the Purchaser in accordance with the provisions of this Section 8.1 and the Purchaser may elect to purchase up to the Purchaser’s Pro Rata Share (as defined below) of the Additional Stock offered by the Company in accordance with the following provisions:

(A) The Company shall deliver a written notice (the “Offering Notice”) to the Purchaser, prior to or concurrently with any written communication being delivered to any potential investor or party concerning such Additional Stock, stating (i) the Company’s intention to offer such Additional Stock in a bona fide transaction, (ii) the number of shares of Additional Stock to be offered, (iii) the price and other material terms and conditions, if any, upon which the Company proposes to offer the Additional Stock and (iv) a statement as to the number of days from receipt of the Offering Notice within which the Purchaser must respond to the Offering Notice (which period shall not be less [****] (the “Response Period”). The Offering Notice shall constitute a binding offer by the Company to sell Additional Stock to the Purchaser up to the Purchaser’s Pro Rata Share of the Additional Stock at the price per share and on the terms designated in the Offering Notice, subject to and in accordance with the terms of this Section 8.1; provided, however, that the Purchaser shall not be required to meet the non-monetary consideration set forth in the Offering Notice, if any, including, without limitation, delivery of other securities or property in exchange for the Additional Stock to be sold, if the Purchaser pays alternative, but comparable, consideration in cash as determined in good faith by the Board of Directors of the Company. The price per share and the terms of the Additional Stock designated in the Offering Notice shall not be any less favorable than (x) the price per share and terms offered by the Company to any other party with respect to the Additional Stock; or (y) the price per share and terms accepted by the Company from any other party with respect to the Additional Stock.

(B) Prior to the expiration of the Response Period, the Purchaser shall notify the Company in writing of the number of shares of Additional Stock, if any, the Purchaser intends to purchase pursuant to the terms of the Offering Notice up to the Purchaser’s Pro Rata Share of the Additional Stock. If the Purchaser fails to timely deliver its written acceptance to purchase up to its Pro Rata Share of the Additional Stock, the Purchaser shall be deemed to have waived its right to purchase Additional Stock pursuant to this Section 8.1 with respect to that particular offer by the Company of Additional Stock. The closing of the purchase by the Purchaser of Additional Stock shall be conditioned on the sale of all of the Additional Stock and take place at the same closing as that of any third-party purchasers, at the principal executive offices of the Company (or such other location as the parties may agree on) on the fifth business day after the expiration of the Response Period. At such closing, the Purchaser shall make payment in the appropriate amount by means of a cashiers check or by a wire transfer to the Company against delivery of stock certificates representing the Additional Stock so purchased.

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(C) After expiration of the Response Period, the Company may for a period of [****] offer the remaining unsubscribed portion of the Purchaser’s Pro Rata Share of the Additional Stock, if any, to any other party at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offering Notice. If the Company does not enter into an agreement for the sale of the remaining unsubscribed portion the Additional Stock within such period, or if such agreement is not consummated within [****] of the execution thereof, the right provided pursuant to this Section 8.1 shall be deemed to be revived and such remaining unsubscribed portion the Additional Stock shall not be offered unless first reoffered to the Purchaser in accordance with this Section 8.1.

(D) [****]

(E) The Purchaser shall keep the information received by it in an Offering Notice confidential to the extent necessary to comply with applicable securities laws (including, without limitation, Regulation FD).

SECTION 9. MISCELLANEOUS

9.1 Successors and Assigns. This Agreement, and the rights and obligations of the Parties hereunder, may not be assigned to a Third Party, other than a permitted assignee of the Collaboration Agreement. Except as otherwise provided herein, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the respective successors, assigns, heirs, executors, and administrators of the parties hereto.

9.2 Expenses. Except as provided in Section 6 hereof, each party to the Agreement will pay its own expenses in connection with the transactions contemplated by this Agreement, whether or not the transactions are consummated.

9.3 Indemnification. The Company and the Purchaser will indemnify and hold the other parties harmless from and against any and all claims, liabilities or obligations with respect to investment banking, brokerage or finders’ fees or commissions, or consulting fees in connection with the transactions contemplated by this Agreement asserted by any person on the basis of any agreement, statement or representation alleged to have been made by such indemnifying party.

9.4 Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

9.5 Governing Law; Venue; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the laws of the State of California and the laws of the United States applicable therein (in each case without giving effect to any choice or conflict of laws provision or rule that would cause the application of the laws of any other jurisdiction) and shall be treated in all respects as a California contract. Any action, suit or proceeding arising out of or relating to this Agreement shall be brought in San Francisco County, California or, if it has or can

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acquire jurisdiction, any Federal court located in such State and County, and EACH OF THE PARTIES HERETO, AFTER CONSULTING WITH OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND WAIVES TRIAL BY JURY (AND AGREES NOT TO REQUEST TRIAL BY JURY), IN EACH CASE IN CONNECTION WITH ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. Each of the parties hereto hereby irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in the courts of the State of California or the United States of America, in each case located in San Francisco County, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such matter brought in any such court has been brought in an inconvenient forum. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

9.6 Injunctive Relief. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed by the parties that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this remedy being in addition to any other remedy to which they are entitled to at law or in equity.

9.7 Notice. All notices, requests, consents, and other communications under this Agreement shall be in writing and shall be deemed delivered (a) three Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, (b) one Business Day after being sent via a reputable nationwide overnight courier service guaranteeing next Business Day delivery, or (c) upon delivery when sent by facsimile (with confirmation of receipt), in each case to the intended recipient as set forth below:

If to the Company:

La Jolla Pharmaceutical Company

6455 Nancy Ridge Drive

San Diego, CA 92121

Attention: Chief Executive Officer

Fax: (858) 626-2851

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or at such other address as may have been furnished in writing by the Company to the other parties hereto, with a copies to:

Wilson Sonsini Goodrich & Rosati PC

650 Page Mill Road

Palo Alto, CA 94304

Attention: Kenneth A. Clark and Troy Foster

Fax: (650) 493-6811

Goodwin Procter, LLP

53 State Street

Boston, MA 02109

Attention: Mitchell Bloom and Ryan A. Murr

Fax: (617) 523-1231

If to the Purchaser, at its address set forth on Schedule A, or at such other address as may have been furnished in writing by such party to the Company, with a copy to its legal counsel set forth on Schedule A.

Any party may give any notice, request, consent or other communication under this Agreement using any other means (including, without limitation, personal delivery, messenger service or electronic mail), but no such notice, request, consent or other communication shall be deemed to have been duly given unless and until it is actually received by the party for whom it is intended. Any party may change the address to which notices, requests, consents or other communications hereunder are to be delivered by giving the other parties notice in the manner set forth in this Section.

9.8 Entire Agreement. This Agreement and the Collaboration Agreement (and the schedules and exhibits hereto and thereto) contain the entire agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings, written or oral.

9.9 Amendment. This Agreement may be amended or terminated and the observance of any term of this Agreement may be waived with respect to all parties to this Agreement (either generally or in a particular instance and either retroactively or prospectively), with the written consent of the Company and the Purchaser.

9.10 Rights Cumulative. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Except as set forth in this Agreement, no failure or delay by any party in exercising any right, power, or privilege under this Agreement will operate as a waiver of the right, power, or privilege, and no single or partial exercise of any right, power, or privilege will preclude any other or further exercise of the right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law (a) no claim or right arising out of this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing, (b) no waiver that may be given by a party will

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be applicable except in the specific instance for which it is given, and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of that party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.

9.11 Interpretation. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa.

9.12 Counterparts. This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to each other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

9.13 Headings. The section headings are for the convenience of the parties and in no way alter, modify, amend, limit or restrict the contractual obligations of the parties. Any reference in this Agreement to a particular section or subsection shall refer to a section or subsection of this Agreement, unless specified otherwise.

9.14 Confidentiality. This Agreement shall be governed by the confidentiality provisions of Article X of the Collaboration Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

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

PURCHASER:	BIOMARIN PHARMACEUTICAL INC.
		By:	/s/ Jean-Jacques Bienaimé
			Name: Jean-Jacques Bienaimé Title: Chief Executive Officer

COMPANY:	LA JOLLA PHARMACEUTICAL COMPANY
		By:	/s/ Deirdre Gillespie
			Name: Deirdre Y. Gillespie, M.D. Title: President and Chief Executive Officer

[Signature Page to Securities Purchase Agreement]

SCHEDULE A

Purchaser

BioMarin Pharmaceutical Inc.

105 Digital Drive

Novato, CA 94949

Attention: Chief Executive Officer

Fax: (415) 382-7889

With a copy to:

BioMarin Pharmaceutical Inc.

105 Digital Drive

Novato, CA 94949

Attention: General Counsel

Fax: (415) 506-6425

Counsel to Purchaser

Paul, Hastings, Janofsky & Walker LLP

55 Second Street, 24th Floor

San Francisco, CA 94105

Attention: Thomas R. Pollock

Fax: (415) 856-7100

EXHIBIT A

Certificate of Designation

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LA JOLLA PHARMACEUTICAL COMPANY

CERTIFICATE OF DESIGNATIONS

OF

SERIES B-1 CONVERTIBLE PREFERRED STOCK

(Pursuant to Section 151 of the Delaware General Corporation Law)

La Jolla Pharmaceutical Company, a Delaware corporation (the “Corporation”), in accordance with the provisions of Section 103 of the Delaware General Corporation Law (the “DGCL”) does hereby certify that, in accordance with Section 141(c) of the DGCL, the following resolution was duly adopted by the Board of Directors of the Corporation as of December 18, 2008:

RESOLVED, that the Board of Directors of the Corporation pursuant to authority expressly vested in it by the provisions of the Amended and Restated Certificate of Incorporation of the Corporation, hereby authorizes the issuance of a series of preferred stock designated as the Series B-1 Convertible Preferred Stock, par value $0.01 per share, of the Corporation and hereby fixes the designation, number of shares, powers, preferences, rights, qualifications, limitations and restrictions thereof (in addition to any provisions set forth in the Amended and Restated Certificate of Incorporation of the Corporation which are applicable to the preferred stock of all classes and series) as follows:

SERIES B-1 CONVERTIBLE PREFERRED STOCK

1. Designation, Amount and Par Value. The following series of preferred stock shall be designated as the Corporation’s Series B-1 Convertible Preferred Stock (the “Series B-1 Preferred Stock”), and the number of shares so designated shall be 3,391,035. Each share of Series B-1 Preferred Stock shall have a par value of $0.01 per share.

2. Liquidation; Dissolution or Winding Up. In the event of any liquidation (other than a liquidation following an M&A Event (as defined below)), dissolution or winding up (either voluntary or involuntary) of the Corporation, the holders of Series B-1 Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of the Corporation’s common stock, par value $0.01 per share (the “Common Stock”) and pari passu with any distribution of any of the assets of the Corporation to the holders of the Corporation’s junior preferred stock (including any other series of preferred stock such as Series B-2 or B-3 Preferred Stock) or series or class of any other stock of the Corporation other than common stock (the “Junior Stock”), by reason of their ownership thereof, an amount per share equal to the sum of (i) $2.21171 per share for each outstanding share of Series B-1 Preferred Stock, plus (ii) an amount equal to accrued but unpaid dividends on

such share. If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series B-1 Preferred Stock and all other shares of other series of preferred stock equal in preference to the Series B-1 Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts that such holders are entitled to, then, the entire assets and funds of the Corporation remaining legally available for distribution shall be distributed ratably among the holders of the Series B-1 Preferred Stock and all other shares of other series of preferred stock equal in preference to the Series B-1 Preferred Stock in proportion to the amount of such stock owned by each such holder. The Corporation shall mail to each holder of Series B-1 Preferred Stock, at least ten (10) days prior to any liquidation event, a notice setting forth the date on which such event is expected to become effective and the type and amount of anticipated proceeds per share of Common Stock to be distributed with respect thereto and shall afford each such holder the opportunity to convert such shares of Series B-1 Preferred Stock into Common Stock pursuant to Section 5 (conditional upon the consummation of such liquidation event) prior to the consummation thereof.

3. Consolidation; Merger; Sale of Assets; Stock Splits; Consolidations, Etc.

(a) Mandatory Conversion. In case the Corporation shall enter into any consolidation, merger or sale of all or substantially all of the assets of the Corporation (other than a recapitalization, subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in Sections 3(b) or 6 hereof) (each, an “M&A Event”), then as a part of and immediately prior to such consolidation, merger or asset sale, all shares of Series B-1 Preferred shall automatically be converted into Common Stock in accordance with the ratio provided in Section 5(a) and the procedures described in Section 5(b). The conversion of the shares shall take place without regard to the delivery of certificates to the Corporation as provided for in Section 5(b).

(b) In the event the Corporation shall (i) effect a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater number of shares of Common Stock (without a corresponding subdivision of the Series B-1 Preferred Stock), then the Series B-1 Conversion Rate in effect immediately before that subdivision shall be proportionately increased; and (ii) effect a combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a lesser number of shares of Common Stock (without a corresponding combination or consolidation of the Series B-1 Preferred Stock), then the Series B-1 Conversion Rate in effect immediately before that combination or consolidation shall be proportionately decreased. Any adjustment under this Section shall become effective at the close of business on the date the subdivision, combination or consolidation becomes effective.

4. Mandatory Conversion Upon Termination of Development Agreement. Immediately upon termination of that certain Development and Commercialization Agreement dated as of January 4, 2009 by and between La Jolla Pharmaceutical Company and BioMarin CF Limited for any reason, each share of Series B-1 Preferred Stock shall automatically be converted into that number of fully paid and nonassessable shares of Common Stock equal to the Series B-1 Conversion Rate. The “Series B-1 Conversion Rate” shall initially be one for three (i.e., three shares of Common Stock for every one share of Series B-1 Preferred Stock). The “Series B-1 Conversion Rate” shall be subject to adjustment from time to time in accordance with Sections 3 and 6. All references herein to the Series B-1 Conversion Rate herein shall mean the Series B-1 Conversion Rate as so adjusted.

5. Optional Conversion. The holders of the Series B-1 Preferred Stock shall have optional conversion rights as follows:

(a) Conversion Ratio. Subject to Section 5(b) below, each share of Series B-1 Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for the Series B-1 Preferred Stock, into that number of fully paid and non-assessable shares of Common Stock equal to the then-applicable Series B-1 Conversion Rate.

(b) Mechanics of Conversion. Before any holder of Series B-1 Preferred Stock shall be entitled to convert the same into shares of Common Stock pursuant to this Section 5, such holder shall surrender the certificate or certificates therefor, duly endorsed in blank, at the office of the Corporation or of any transfer agent for the Series B-1 Preferred Stock, and shall give written notice by mail, postage prepaid, to the Corporation at its principal corporate office, of the election to convert the same and shall state therein the name or names (so long as such certificate is in the name of the holder or an affiliate of the holder) in which the certificate or certificates for shares of Common Stock are to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series B-1 Preferred Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Series B-1 Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date. If the conversion is in connection with an underwritten offer of securities registered pursuant to the Securities Act of 1933, as amended, the conversion may, at the option of any holder tendering Series B-1 Preferred Stock for conversion, be conditioned upon the closing with the underwriter of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive the Common Stock issuable upon such conversion of the Series B-1 Preferred Stock shall not be deemed to have converted such Series B-1 Preferred Stock until immediately prior to the closing of such sale of securities.

6. Adjustment for Common Stock Dividends, Distributions, Reclassification, Exchange and Substitution.

(a) In the event the Corporation shall at any time declare or issue any dividend on the Common Stock payable in shares of Common Stock or other distribution payable in additional shares of Common Stock, then the holders of the outstanding shares of Series B-1 Preferred Stock shall be entitled to receive such dividend or other distribution on an as-converted to Common Stock basis.

(b) If at any time the Common Stock issuable upon the conversion of the Series B-1 Preferred is changed into the same or a different number of shares of any class or classes of

stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend or a reorganization, merger, consolidation or sale of assets provided for in Sections 3 or 6(b)), in any such event each holder of Series B-1 Preferred shall have the right thereafter to convert such stock into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change by holders of the maximum number of shares of Common Stock into which such shares of Series B-1 Preferred could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof.

7. Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of the Series B-1 Preferred Stock such number of its shares of Common Stock or other securities into which the Series B-1 Preferred Stock is then convertible as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series B-1 Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series B-1 Preferred Stock, in addition to such other remedies as shall be available to the holder of such Series B-1 Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

8. Cash Dividends. In the event dividends are paid on any share of Common Stock, an additional dividend shall be paid with respect to all outstanding shares of Series B-1 Preferred in an amount equal per share (on an as-if-converted to Common Stock basis) to the amount paid or set aside for each share of Common Stock. So long as any shares of Series B-1 Preferred shall be outstanding, no dividend, whether in cash or property, shall be paid or declared, nor shall any other distribution be made, on any Junior Stock or Common Stock until all dividends (set forth herein) on the Series B-1 Preferred shall have been paid or declared and set apart. The provisions of this Section shall not, however, apply to (i) a dividend payable in Common Stock, (ii) the acquisition of shares of any Common Stock in exchange for shares of any other Common Stock, or (iii) any repurchase of any outstanding securities of the Corporation that is approved by the Corporation’s Board of Directors.

9. No Voting Rights. The holders of shares of Series B-1 Preferred Stock shall have no voting rights.

10. No Redemption. The shares of Series B-1 Preferred Stock shall not be redeemable.

11. Reacquired Shares. Any shares of Series B-1 Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Series B-1 Preferred Stock and may be reissued as part of a new series of preferred stock subject to the conditions and restrictions on issuance set forth herein, in the Amended and Restated Certificate of Incorporation, or in any other Certificate of Designations creating a series of preferred stock or any similar stock or as otherwise required by law.

12. Notices. Any notice required to be given to the holder of shares of Series B-1 Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to the holder of record at its address appearing on the books of the Corporation.

13. Headings. The headings herein are for convenience only, do not constitute a part of this Certificate of Designations and shall not be deemed to limit or affect any of the provisions hereof.

14. Amendments. No provision of this Certificate of Designations may be amended, except in a written instrument signed by the Corporation and holders of a majority of the shares of Series B-1 Preferred Stock then outstanding. Any of the rights of the holder of Series B-1 Preferred Stock set forth herein may be waived by the affirmative vote of the holders of a majority of the shares of Series B-1 Preferred Stock then outstanding. No waiver of any default with respect to any provision, condition or requirement of this Certificate of Designations shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

[END OF TEXT. SIGNATURE PAGE FOLLOWS.]

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations to be duly executed as of this          day of January, 2009.

LA JOLLA PHARMACEUTICAL COMPANY
By:
	Name: Deirdre Y. Gillespie, M.D. Title: President and Chief Executive Officer

EXHIBIT B

Form of Legal Opinion

January 20, 2009

[****]

EX-10.31

Exhibit 10.31

EXECUTION COPY

AMENDMENT NO. 1

TO

DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

THIS AMENDMENT NO. 1 (the “Amendment”), dated January 16, 2009, amends that certain Development and Commercialization Agreement, dated as of January 4, 2009 (the “Development Agreement”), by and between La Jolla Pharmaceutical Company, a Delaware corporation (the “Company”), and BioMarin CF Limited, an Irish corporation (“BioMarin CF”).

RECITALS

A. WHEREAS, in connection with the Development Agreement, the Company and BioMarin Pharmaceutical Inc., a Delaware corporation (“BioMarin Pharmaceutical”), entered into that certain Securities Purchase Agreement, dated as of January 4, 2009 (the “Securities Purchase Agreement”);

B. WHEREAS, the Company and BioMarin Pharmaceutical have made certain changes to the Securities Purchase Agreement in the form of an amendment to the Securities Purchase Agreement (the “Amendment to the Securities Purchase Agreement”); and

C. WHEREAS, the Company and BioMarin CF desire to make conforming changes to the Development Agreement to reflect certain changes made by the Amendment to the Securities Purchase Agreement.

NOW, THEREFORE, in consideration of the foregoing, the parties agree as follows:

1. Section 1.41 of the Development Agreement is amended and restated in its entirety as follows:

“1.41 “Securities Purchase Agreement” shall mean the form of securities purchase agreement, as amended by the Amendment to the Securities Purchase Agreement, each as attached to this Agreement as Exhibit 1.41.”

2. Exhibit 1.41 to the Development Agreement shall be amended and restated in its entirety in the form of Exhibit 1.41 attached hereto.

3. Undefined capitalized terms used in this Amendment shall have the meanings ascribed to them in the Development Agreement.

4. Except as expressly set forth in this Amendment, all other terms of the Development Agreement shall remain in full force and effect and once this Amendment is executed by the parties hereto, all references in the Development Agreement to “the Agreement” or “this Agreement,” as applicable, shall refer to the Development Agreement, as modified by this Amendment.

5. This Amendment shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and to be performed entirely within such State without regard to conflict of laws principles thereof.

6. This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

*            *            *

IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed as of the date first set forth above.

LA JOLLA PHARMACEUTICAL COMPANY		BIOMARIN CF LIMITED
By:	/s/ Deirdre Y. Gillespie	By:	/s/ G. Eric Davis
Name:	Deirdre Y. Gillespie, M.D.	Name:	G. Eric Davis
Title:	President and Chief Executive Officer	Title:	Managing Director

Exhibit 1.41

Securities Purchase Agreement

[Filed as Exhibit 10.30 to BioMarin’s Annual Report on Form 10-K

for the year ended December 31, 2008]

EX-10.32

Exhibit 10.32

EXECUTION COPY

AMENDMENT NO. 1

TO

SECURITIES PURCHASE AGREEMENT

THIS AMENDMENT NO. 1 (the “Amendment”), dated January 16, 2009, amends that certain Securities Purchase Agreement, dated as of January 4, 2009 (the “Agreement”), by and between La Jolla Pharmaceutical Company, a Delaware corporation (the “Company”), and BioMarin Pharmaceutical Inc., a Delaware corporation (the “Purchaser”).

RECITALS

A. WHEREAS, the Purchaser and the Company are parties to the Agreement, which provides for the issuance of shares of the Company’s Series B Convertible Preferred Stock on the terms set forth therein;

B. WHEREAS, Exhibit A to the Agreement sets forth the form of Certificate of Designation to be filed with the Delaware Secretary of State to designate the rights, preferences and privileges of the Company’s Series B-1 Convertible Preferred Stock (the “Certificate”);

C. WHEREAS, the Certificates of Designation to be filed with respect to the Company’s Series B-2 Convertible Preferred Stock and Series B-3 Convertible Preferred Stock are to be in substantially the form of the Certificate, with any appropriate adjustments needed to reflect the issuance price for such shares;

D. WHEREAS, under the terms of the Certificate, the Series B Convertible Preferred Stock is convertible into Common Stock at an initial ratio of one-for-three (i.e., three shares of Common Stock for every one share of Series B Convertible Preferred Stock); and

E. WHEREAS, the Company and the Purchaser wish to amend the form of Certificate and certain related terms of the Agreement to change the initial conversion ratio for the Common Stock to one-for-thirty (i.e., thirty shares of Common Stock for every one share of Series B Convertible Preferred Stock).

Now therefore, in consideration of the foregoing, the parties agree as follows:

1. Section 1.2 of the Agreement is amended and restated in its entirety as follows:

“1.2 Purchase and Sale. Subject to the terms and conditions of this Agreement and the Collaboration Agreement, on the date hereof, the Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the Company, 339,104 Shares (the “Initial Investment”) at a purchase price per share of $22.1171, in the case of the Initial Closing, or, in the case of a Subsequent Closing (as defined below) at a price per common share equivalent (based on the conversion ratio provided for in the applicable Certificate of Designation, as adjusted) equal to one hundred ten percent (110%) of the average closing price of the Common Stock of the Company as reported on the NASDAQ stock market or such other reporting service as the stock is then quoted if not then quoted on NASDAQ (and if not then traded at the value determined by an investment bank selected consistent with the provisions of Section 14.3 of the Collaboration Agreement), for the ten (10)

consecutive trading days commencing five (5) trading days immediately prior to the date the Company has publicly announced the event that triggered such payment (i.e., the P-Value Achievement, or in the case of such payment where there is no P-Value Achievement, the Company’s first public announcement of the results of the Second Interim Efficacy Analysis or the first public announcement of the approval of an NDA for the Product under Section 7.13 of the Collaboration Agreement (the “Announcement of Results”)). Notwithstanding the foregoing, in no event will the price per common equivalent for the Shares issued in a Subsequent Closing (based on the conversion ratio provided for in the applicable Certificate of Designation, as adjusted) be less than $0.73724.

2. Exhibit A, as attached to the Agreement, is hereby amended and restated in its entirety and is replaced with Exhibit A attached to this Amendment. The defined term “Certificate of Designation,” as used in the Agreement, shall hereafter be deemed to refer to the Certificate of Designation for the Series B-1 Convertible Preferred Stock attached as Exhibit A to this Amendment.

3. Section 3.3 is hereby amended to substitute 37,301,327 for 37,301,387.

4. Undefined capitalized terms used in this Amendment shall have the meanings ascribed to them in the Agreement.

5. Except as expressly set forth in this Amendment, all other terms of the Agreement shall remain in full force and effect and once this Amendment is executed by the parties hereto, all references in the Agreement to “the Agreement” or “this Agreement,” as applicable, shall refer to the Agreement, as modified by this Amendment.

6. This Amendment shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and to be performed entirely within such State without regard to conflict of laws principles thereof.

7. This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

*            *            *

2

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first above written.

PURCHASER:	BIOMARIN PHARMACEUTICAL INC.
	By:	/s/ G. Eric Davis
		Name:	G. Eric Davis
		Title:	VP, General Counsel
COMPANY:	LA JOLLA PHARMACEUTICAL COMPANY
	By:	/s/ Deirdre Y. Gillespie
		Name:	Deirdre Y. Gillespie
		Title:	President and Chief Executive Officer

3

EXHIBIT A

Certificate of Designation

LA JOLLA PHARMACEUTICAL COMPANY

CERTIFICATE OF DESIGNATIONS

OF

SERIES B-1 CONVERTIBLE PREFERRED STOCK

(Pursuant to Section 151 of the Delaware General Corporation Law)

La Jolla Pharmaceutical Company, a Delaware corporation (the “Corporation”), in accordance with the provisions of Section 103 of the Delaware General Corporation Law (the “DGCL”) does hereby certify that, in accordance with Section 151(g) of the DGCL, the following resolution was duly adopted by the Board of Directors of the Corporation as of December 18, 2008:

RESOLVED, that the Board of Directors of the Corporation pursuant to authority expressly vested in it by the provisions of the Amended and Restated Certificate of Incorporation of the Corporation, hereby authorizes the issuance of a series of preferred stock designated as the Series B-1 Convertible Preferred Stock, par value $0.01 per share, of the Corporation and hereby fixes the designation, number of shares, powers, preferences, rights, qualifications, limitations and restrictions thereof (in addition to any provisions set forth in the Amended and Restated Certificate of Incorporation of the Corporation which are applicable to the preferred stock of all classes and series) as follows:

SERIES B-1 CONVERTIBLE PREFERRED STOCK

1. Designation, Amount and Par Value. The series of preferred stock shall be designated as the Corporation’s Series B-1 Convertible Preferred Stock (the “Series B-1 Preferred Stock”), and the number of shares so designated shall be 339,104. Each share of Series B-1 Preferred Stock shall have a par value of $0.01 per share.

2. Liquidation; Dissolution or Winding Up. In the event of any liquidation (other than a liquidation following an M&A Event (as defined below)), dissolution or winding up (either voluntary or involuntary) of the Corporation, subject to the rights of any series of Preferred Stock or other class of stock of the Corporation whose terms expressly provide that it ranks senior to the Series B-1 Preferred Stock as to dividends and distributions, upon dissolution or winding up of the Corporation (the “Senior Stock”), the holders of Series B-1 Preferred

Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of the Corporation’s common stock, par value $0.01 per share (the “Common Stock”) and pari passu with any distribution of any of the assets of the Corporation to the holders of any other series of Preferred Stock or other class of stock of the Corporation whose terms expressly provide that they rank pari passu with the Series B-1 Preferred Stock as to dividends and distributions upon the liquidation, dissolution or winding up of the Corporation (“Parity Stock”) by reason of their ownership thereof, an amount per share equal to the sum of (i) $22.1171, plus (ii) an amount equal to accrued but unpaid dividends on such share. If upon the occurrence of such event, the assets and funds to be distributed among the holders of the Series B-1 Preferred Stock and the Parity Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts that such holders are entitled to, then, the entire assets and funds of the Corporation remaining legally available for distribution shall be distributed ratably among the holders of the Series B-1 Preferred Stock and the Parity Stock in proportion to their respective liquidation preferences. The Corporation shall mail to each holder of Series B-1 Preferred Stock, at least ten (10) days prior to any liquidation event, a notice setting forth the date on which such event is expected to become effective and the type and amount of anticipated proceeds per share of Common Stock to be distributed with respect thereto and shall afford each such holder the opportunity to convert such shares of Series B-1 Preferred Stock into Common Stock pursuant to Section 5 (conditional upon the consummation of such liquidation event) prior to the consummation thereof.

3. Consolidation; Merger; Sale of Assets; Stock Splits; Consolidations, Etc.

(a) Mandatory Conversion. In case the Corporation shall consummate any consolidation, merger or sale of all or substantially all of the assets of the Corporation (other than a recapitalization, subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in Sections 3(b) or 6 hereof) (each, an “M&A Event”), then immediately prior to consummation of such consolidation, merger or asset sale, all shares of Series B-1 Preferred shall automatically be converted into Common Stock in accordance with the ratio provided in Section 5(a) and the procedures described in Section 5(b). The conversion of the shares shall take place without regard to the delivery of certificates to the Corporation as provided for in Section 5(b).

(b) In the event the Corporation shall (i) effect a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater number of shares of Common Stock (without a corresponding subdivision of the Series B-1 Preferred Stock), then the Series B-1 Conversion Rate in effect immediately before that subdivision shall be proportionately increased; or (ii) effect a combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise) into a lesser number of shares of Common Stock (without a corresponding combination or consolidation of the Series B-1 Preferred Stock), then the Series B-1 Conversion Rate in effect immediately before that combination or consolidation shall be proportionately decreased. Any adjustment under this Section shall become effective at the close of business on the date the subdivision, combination or consolidation becomes effective.

4. Mandatory Conversion Upon Termination of Development Agreement. Immediately upon termination of that certain Development and Commercialization Agreement dated as of January 4, 2009 by and between La Jolla Pharmaceutical Company and BioMarin CF Limited for any reason in accordance with the terms thereof, each share of Series B-1 Preferred Stock shall automatically be converted into that number of fully paid and nonassessable shares of Common Stock equal to the Series B-1 Conversion Rate. The “Series B-1 Conversion Rate” shall initially be one for thirty (i.e., thirty shares of Common Stock for every one share of Series B-1 Preferred Stock). The “Series B-1 Conversion Rate” shall be subject to adjustment from time to time in accordance with Sections 3 and 6. All references herein to the Series B-1 Conversion Rate herein shall mean the Series B-1 Conversion Rate as so adjusted.

5. Optional Conversion. The holders of the Series B-1 Preferred Stock shall have optional conversion rights as follows, which must be exercised as to all shares of Series B-1 Preferred Stock outstanding:

(a) Conversion Ratio. Subject to Section 5(b) below, each share of Series B-1 Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for the Series B-1 Preferred Stock, into that number of fully paid and non-assessable shares of Common Stock determined by multiplying such share of Series B-1 Preferred Stock and the then-applicable Series B-1 Conversion Rate.

(b) Mechanics of Conversion. Before any holder of Series B-1 Preferred Stock shall be entitled to convert the same into shares of Common Stock pursuant to this Section 5, such holder shall surrender the certificate or certificates therefor, duly endorsed in blank, at the office of the Corporation or of any transfer agent for the Series B-1 Preferred Stock, and shall give written notice by mail, postage prepaid, to the Corporation at its principal corporate office, of the election to convert the same and shall state therein the name or names (so long as such certificate is in the name of the holder or an affiliate of the holder) in which the certificate or certificates for shares of Common Stock are to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series B-1 Preferred Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Series B-1 Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date. If the conversion is in connection with an underwritten offer of securities registered pursuant to the Securities Act of 1933, as amended, the conversion may, at the option of any holder tendering Series B-1 Preferred Stock for conversion, be conditioned upon the closing with the underwriter of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive the Common Stock issuable upon such conversion of the Series B-1 Preferred Stock shall not be deemed to have converted such Series B-1 Preferred Stock until immediately prior to the closing of such sale of securities.

6. Adjustment for Common Stock Dividends, Distributions, Reclassification, Exchange and Substitution.

(a) In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock or other distribution payable in additional shares of Common Stock, then the holders of the outstanding shares of Series B-1 Preferred Stock shall be entitled to receive such dividend or other distribution on an as-converted to Common Stock basis.

(b) If at any time the Common Stock issuable upon the conversion of the Series B-1 Preferred is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend or a reorganization, merger, consolidation or sale of assets provided for in Sections 3 or 6(b)), in any such event each holder of Series B-1 Preferred shall have the right thereafter to convert such stock into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change by holders of the maximum number of shares of Common Stock into which such shares of Series B-1 Preferred could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof.

7. Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of the Series B-1 Preferred Stock such number of its shares of Common Stock or other securities into which the Series B-1 Preferred Stock is then convertible as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series B-1 Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series B-1 Preferred Stock, in addition to such other remedies as shall be available to the holder of such Series B-1 Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

8. Cash and Property Dividends. In the event dividends are paid in cash or property of the Corporation on shares of Common Stock, an additional dividend in cash or property of the Corporation shall be paid with respect to all outstanding shares of Series B-1 Preferred in an amount per share (on an as-if-converted to Common Stock basis) equal to the amount paid or set aside for each share of Common Stock. So long as any shares of Series B-1 Preferred shall be outstanding, no dividend, whether in cash or property, shall be paid or declared, nor shall any other distribution be made, on any Parity Stock or Common Stock until all dividends (set forth herein) on the Series B-1 Preferred shall have been paid or declared and set apart. The provisions of this Section shall not, however, apply to (i) a dividend payable in Common Stock, (ii) the acquisition of shares of any Common Stock in exchange for shares of any other Common Stock, or (iii) any repurchase of any outstanding securities of the Corporation that is approved by the Corporation’s Board of Directors.

9. No Voting Rights. Except as provided herein, the holders of shares of Series B-1 Preferred Stock shall have no voting rights.

10. No Redemption. The shares of Series B-1 Preferred Stock shall not be redeemable.

11. Reacquired Shares. Any shares of Series B-1 Preferred Stock converted, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Amended and Restated Certificate of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law.

12. Notices. Any notice required to be given to the holders of shares of Series B-1 Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to the holder of record at its address appearing on the books of the Corporation.

13. Headings. The headings herein are for convenience only, do not constitute a part of this Certificate of Designations and shall not be deemed to limit or affect any of the provisions hereof.

14. Ranking. The Series B-1 Preferred Stock shall, with respect to distributions of assets in the event of any liquidation (other than a liquidation following an M&A Event), dissolution or winding up of the Corporation rank senior to the Common Stock and the Series A Junior Participating Cumulative Preferred Stock of the Corporation.

15. Amendments. No provision of this Certificate of Designations may be amended, altered or repealed (including by merger, consolidation or otherwise), without the affirmative vote of the holders of a majority of the shares of Series B-1 Preferred Stock then outstanding. Any of the rights of the holders of Series B-1 Preferred Stock set forth herein may be waived by the affirmative vote of the holders of a majority of the shares of Series B-1 Preferred Stock then outstanding. No waiver of any default with respect to any provision, condition or requirement of this Certificate of Designations shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

[END OF TEXT. SIGNATURE PAGE FOLLOWS.]

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations to be duly executed as of this 16th day of January, 2009.

LA JOLLA PHARMACEUTICAL COMPANY
By:
	Name: Deirdre Y. Gillespie, M.D.
	Title: President and Chief Executive Officer

EX-10.33

Exhibit 10.33

Summary of Bonus Plan

Overview and Purpose

The BioMarin Pharmaceutical Inc. Bonus Plan (the “Bonus Plan”) is an annual cash bonus program that is generally applicable to all employees of BioMarin Pharmaceutical Inc. (the “Company”), including its executive officers, and is designed to offer incentive cash compensation to employees of the Company by rewarding achievement of specifically measured corporate goals and individual performance.

Administration

The Bonus Plan is administered by the Compensation Committee (the “Compensation Committee”) of the Board of Directors (the “Board”), with the support of Company management and oversight by the full Board. Specifically, the full Board approves the particular corporate goals each year, approves the target payout for the Company’s chief executive officer, and reviews the Company’s performance against the annual targets. The Compensation Committee has authority for all other aspects of administering the Bonus Plan.

Eligibility

Except as set forth below, each employee of the Company who was employed as of the first week of July of each year is eligible to participate in the Bonus Plan for that year. All employees who are hired between January 1, 2009 and the first week of July will be eligible for a prorated bonus. The Company reserves the right to amend eligibility dates as appropriate, or to grant waivers for later hired employees. An employee who takes one or more leaves of absence totaling three or more weeks during a calendar year will be eligible to receive a bonus prorated by the time off in excess of three weeks. The bonus is typically paid out in the first quarter of the year following eligibility. To receive a bonus, an employee must be employed by the Company and in good standing on the payout date. Employees who are eligible for sales compensation are not eligible for the Bonus Plan.

Corporate Performance and Bonus Payout

The Bonus Plan is based on the following factors:

1. Corporate Performance: Corporate performance determines the size of the bonus “pool” payable under the Bonus Plan. In order to determine corporate performance, prior to the beginning of the year, the Board and Compensation Committee will approve a set of corporate goals for the following year. These goals will be based solely on one or more of the following:

• Revenue, with such pre-defined adjustments as the Compensation Committee may determine appropriate;

• achievement of specified milestones in the discovery and development of one or more of the Company’s our products;

• achievement of specified milestones in the commercialization of one or more of the Company’s products;

• achievement of specified milestones in the manufacturing of one or more of the Company’s products;

• expense targets;

• share price (including, but not limited to, growth measure and total shareholder return, or comparative performance against predefined peer group companies);

• earnings per share;

• operating margin;

• gross margin;

• return measures (including, but not limited to, return on assets, capital, equity, or sales);

• net sales growth;

• productivity ratios;

• operating income, with such pre-defined adjustments as the Compensation Committee may determine appropriate;

• net operating profit with such pre-defined adjustments as the Compensation Committee may determine appropriate;

• net earnings or net income (before or after taxes and with such other pre-defined adjustments as the Compensation Committee may determine appropriate);

• cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on capital);

• economic value added;

• market share; and

• working capital targets.

2. Target Cash Bonus Amounts. The Bonus Plan provides a target cash bonus amount for each of the Named Executive Officers and each level of employee of the Company, expressed as a percentage of his or her base salary for each participant. For our executive officers, the target cash bonus ranges from 30-100% of base salary with the exact target for the chief executive officer determined by the Board and the exact target for all other executive officers determined by the Compensation Committee.

3. Bonus Payout Determination. The Board meets near the end of each year to review the Company’s performance against the corporate goals in accordance with the Performance Measurements¹ and approve the bonus pool pay out. At that time, the Board also approves the specific pay out to the Chief Executive Officer and the Compensation Committee approves the specific pay out to the other executive officers. In consultation with individual managers, our management then approves the individual pay outs (within their target bonus amounts) to employees other than the executive officers. In each case, the individual amounts payable to individuals may be adjusted up or down based on the individual’s performance, so long as the

¹ Performance Measurement. The bonus program has various payout levels depending on our performance against the goals. If the corporate goals relating to financial performance are achieved, the pay out is based on a sliding scale. If we achieve 75% of our financial goal, 75% of the amount attributable to the goal will be funded. The amount funded increases proportionally up to a maximum of 200% of the amount associated with the goal, upon reaching 200% of target. The Board has also set a minimum achievement of 75% of the financial goal in order to fund any bonus amount for the financial performance goal. For the goals related to clinical and preclinical programs, each goal has three levels of performance, threshold, target and maximum, based on whether the company has accomplished the minimum acceptable level of performance (threshold), accomplished the goal (target) or exceeded it (maximum). If we do not attain at least the threshold performance level, there will be no pay out attributable to that goal. If we achieve the target goal, then 100% of the amount attributable to that goal will be funded and if we achieve the exceeded goal and the maximum performance level is achieved, then 125% of the amount attributable to that goal would be funded.

Company as a whole pays not more than the total bonus pool approved by the Board. The Company reserves discretion to determine the amount of the bonus as well as whether to pay a bonus at all.

EX-21.1

Exhibit 21.1

Subsidiaries of BioMarin Pharmaceutical Inc. as of December 31, 2008

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 24, 2009, with respect to the consolidated balance sheets of BioMarin Pharmaceutical Inc. and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders’ equity (deficit) and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2008, and the effectiveness of internal control over financial reporting as of December 31, 2008, which reports appear in the December 31, 2008 annual report on Form 10-K of BioMarin Pharmaceutical Inc.

Our reports were based on our audits and the report of other auditors.

(Signed) KPMG LLP

San Francisco, California

February 24, 2009

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 24, 2009

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jean-Jacques Bienaimé, 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, 2009

/s/    JEAN-JACQUES BIENAIMÉ

Jean-Jacques Bienaimé

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jeffrey H. Cooper, 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, 2009

/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, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Jean-Jacques Bienaimé, and Jeffrey H. Cooper, 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, 2009

/s/    JEFFREY H. COOPER

Jeffrey H. Cooper

Chief Financial Officer

February 27, 2009

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, 2008 (unaudited) and 2007	2
Consolidated Statements of Operations for the Years Ended December 31, 2008 (unaudited), 2007 and 2006	3
Consolidated Statements of Cash Flows for the Years Ended December 31, 2008 (unaudited), 2007 and 2006	4
Consolidated Statements of Changes in Venturers’ Capital for each of the Years Ended December 31, 2006, 2007 and 2008 (unaudited)	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 two 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,
	2008		2007
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,991	$	27,865
Accounts receivable		—		32,524
Due from Genzyme Corporation		—		9,931
Inventories		—		26,981
Prepaid expenses and other current assets		—		1,147
Total current assets		2,991		98,448
Technology license fees, net		—		138
Total assets	$	2,991	$	98,586
LIABILITIES AND VENTURERS’ CAPITAL
Current liabilities:
Due to BioMarin Companies	$	257	$	2,087
Due to Genzyme Corporation		988		—
Accrued expenses		—		6,392
Deferred revenue		—		98
Total liabilities		1,245		8,577
Commitments and contingencies (Note J)		—		—
Venturers’ capital:
Venturers’ capital—BioMarin Companies		873		45,005
Venturers’ capital—Genzyme Corporation		873		45,004
Total Venturers’ capital		1,746		90,009
Total liabilities and Venturers’ capital	$	2,991	$	98,586

The accompanying notes are an integral part of these consolidated financial statements.

BioMarin/Genzyme LLC

Consolidated Statements of Operations

(Amounts in thousands)

	For the Years Ended December 31,
	2008			2007		2006
	(Unaudited)
Revenues:
Net product sales	$	—		$	123,671	$	96,291
Operating costs and expenses:
Cost of products sold		—			27,110		24,417
Selling, general and administrative		180			24,682		22,178
Research and development		4,452			11,825		13,318
Total operating costs and expenses		4,632			63,617		59,913
Income from operations		(4,632	)		60,054		36,378
Interest income		198			766		692
Net income (loss)	$	(4,434	)	$	60,820	$	37,070
Net income (loss) attributable to each Venturer:
BioMarin Companies	$	(2,217	)	$	30,410	$	18,535
Genzyme Corporation	$	(2,217	)	$	30,410	$	18,535

The accompanying notes are an integral part of these consolidated financial statements.

BioMarin/Genzyme LLC

Consolidated Statements of Cash Flows

(Amounts in thousands)

	For the Years Ended December 31,
	2008			2007			2006
	(Unaudited)
Cash Flows from Operating Activities:
Net income (loss)	$	(4,434	)	$	60,820		$	37,070
Reconciliation of net income (loss) to cash flows from operating activities:
Amortization expense		—			73			74
Charge for impaired assets		138			—			—
Noncash charge for inventory write down		—			—			185
Increase (decrease) in cash from working capital changes:
Accounts receivable		—			(7,147	)		(4,652	)
Inventories		—			(1,417	)		4,537
Prepaid expenses and other current assets		42			(602	)		(325	)
Due to (from) BioMarin Companies		257			491			526
Due to (from) Genzyme Corporation		988			(3,079	)		5,894
Accrued expenses		—			(200	)		1,765
Deferred revenue		—			8			(483	)
Cash flows from operating activities		(3,009	)		48,947			44,591
Cash Flows from Investing Activities:
Change in restricted cash		—			340			(340	)
Cash flows from investing activities		—			340			(340	)
Cash Flows from Financing Activities:
Capital distribution to BioMarin Companies		(18,770	)		(17,100	)		(19,800	)
Capital distribution to Genzyme Corporation		(6,595	)		(17,100	)		(19,800	)
Capital contribution to BioMarin Companies		1,750			—			—
Capital contribution to Genzyme Corporation		1,750			—			—
Cash flows from financing activities		(21,865	)		(34,200	)		(39,600	)
Increase (decrease) in cash and cash equivalents		(24,874	)		15,087			4,651
Cash and cash equivalents at beginning of period		27,865			12,778			8,127
Cash and cash equivalents at end of period	$	2,991		$	27,865		$	12,778

The accompanying notes are an integral part of these consolidated financial statements.

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, 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
2008 capital distributions (unaudited)		(43,665	)		(43,664	)		(87,329	)
2008 capital contributions (unaudited)		1,750			1,750			3,500
2008 net loss (unaudited)		(2,217	)		(2,217	)		(4,434	)
Balance at December 31, 2008 (unaudited)	$	873		$	873		$	1,746

The accompanying notes are an integral part of these consolidated financial statements.

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. In 2008 both Venturers contributed $1.75 million to the Joint Venture. No contributions were made in 2007 and 2006 because the Joint Venture was profitable in both periods.

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.

On January 1, 2008, the BioMarin Companies and Genzyme restructured the Joint Venture. Instead of sharing all costs and profits equally, Genzyme will record sales of Aldurazyme and will pay BioMarin a tiered payment ranging from approximately 39.5% to 50% of worldwide net product sales, which will also be recorded by BioMarin as product revenue. Certain research and development activities related to Aldurazyme and intellectual property will continue to be managed by the Joint Venture on an equal basis.

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.

The consolidated financial statements as of December 31, 2007, and for the years ended December 31, 2007 and 2006 have been audited.

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.

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.

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 is held on deposit at one financial institution.

Inventories

Prior to January 1, 2008, inventories were valued at cost or, if lower, fair value. The Venturers determined 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. The Venturers analyzed the Joint Venture’s inventory levels quarterly and wrote down to its net realizable value:

• inventory that had become obsolete;

• inventory that had a cost basis in excess of its expected net realizable value;

• inventory in excess of expected requirements; and

• expired inventory.

In January 2008, all inventory was distributed to the BioMarin Companies. At December 31, 2007 and 2006, all of the Joint Venture’s inventories were related to Aldurazyme, a product approved for sale.

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, 2008, 2007 and 2006 does not differ from the reported net income.

Transactions with Affiliates

Prior to January 1, 2008, Genzyme commercialized Aldurazyme in the United States, Canada, the European Union, Latin America and the Asia Pacific regions and, as a result, conducted 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 project 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. The Joint Venture owes Genzyme Corporation $1.0 million at December 31, 2008 for project expenses incurred on behalf of the Joint Venture. Genzyme Corporation owed the Joint Venture $9.9 million at December 31, 2007 consisting of cash received on behalf of the Joint Venture for net product sales, net of project expenses incurred on behalf of the Joint Venture. The Joint Venture owed BioMarin Companies a total of $0.2 million at December 31, 2008 and $2.1 million at December 31, 2007 for project expenses incurred on behalf of the Joint Venture.

Translation of Foreign Currencies

Prior to January 1, 2008, the Joint Venture translated the financial transactions performed by Genzyme’s foreign subsidiaries on behalf of the Joint Venture from local currency into U.S. dollars using the average exchange rate prevailing during each period. The Joint Venture included any gains and losses on these transactions in selling, general and administrative expenses in its results of operations. Under the updated agreement only project expenses incurred by the Venturers are charged to the Joint Venture. In 2008 all expenses incurred on behalf of the Joint Venture were in U.S. dollars. No foreign currency transaction gains or losses were incurred in 2008. Selling, general and administrative expenses includes foreign currency transaction net gains of $2.0 million in 2007 and $1.6 million in 2006.

Derivative Instruments

Prior to January 1, 2008, in accordance with FAS 133, “Accounting for Derivative Instruments and Hedging Activities,” the Joint Venture recognized all derivative instruments as either assets or liabilities in its balance sheet and measured those instruments at fair value. Subsequent changes in fair value were reflected in current earnings or other comprehensive income, depending on whether the derivative instrument was designated as part of a hedge relationship and, if it was, the type of hedge relationship.

Revenue Recognition

Prior to January 1, 2008, the Joint Venture recognized revenue from product sales when persuasive evidence of an arrangement existed, the product had been delivered to the customer, 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. Revenue transactions were evidenced by customer purchase orders, customer contracts in certain instances, invoices and related shipping documents.

Emerging Issues Task Force Issue No. 01-09, “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.

Prior to January 1, 2008, the Joint Venture recorded certain fees paid to its distributors for services as operating expense where the criteria set forth above were met. In 2008 no fees were incurred. In 2007 and 2006 fees incurred for these services were $0.7 million.

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.

C. Accounts Receivable

Prior to January 1, 2008, the Joint Venture’s trade receivables primarily represented amounts due from distributors and healthcare service providers. The Joint Venture stated 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 believed that its credit risk associated with trade receivables was mitigated by the following factors:

• the product was sold to a number of customers over a broad geographic range;

• the Joint Venture performed credit evaluations of its customers on an ongoing basis; and

• the Joint Venture performed a detailed, monthly review of the receivable aging and specific customer balances.

The Joint Venture has not written off any accounts receivables nor found it necessary to record an allowance for doubtful accounts.

D. Inventories (amounts in thousands)

	December 31,
	2008		2007
Raw materials	$	—	$	2,294
Work in process—bulk material		—		11,646
Finished products		—		13,041
Total	$	—	$	26,981

The Joint Venture recorded a charge of $0.2 million in 2006 to write off expired inventory. There were no similar charges in 2008 or 2007.

E. Restricted Cash

In 2007, the Joint Venture entered into a series of foreign currency forward contracts all of which had 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. As of December 31, 2007, the Joint Venture had $0.3 million of restricted cash related to these contracts. As of December 31, 2008 no foreign currency contracts were outstanding and all restrictions on cash were lifted.

F. Technology License Fees

In 2005, the Joint Venture paid $0.4 million for technology license fees. In 2008, as a result of the restructuring, the license fees were written off. Total amortization expense for the Joint Venture’s technology license fees was approximately $138,000 for the year ended December 31, 2008 and $74,000 for the years ended December 31, 2007 and 2006.

G. Accrued Expenses:

Accrued expenses consist of the following (amounts in thousands):

	December 31,
	2008		2007
Royalties	$	—	$	4,911
Rebates		—		908
Other		—		573
Total accrued expenses	$	—	$	6,392

H. Venturers’ Capital

Venturers’ capital is comprised of capital contributions made by the Venturers to fund expenses of the Joint Venture in accordance with the Collaboration Agreement, and income (losses) allocated to the Venturers, net of cash distributions to the Venturers. All funding is shared equally by the two Venturers. As of December 31, 2008, the BioMarin Companies and Genzyme have each provided a total of $69.1 million of funding to the Joint Venture, net of $39.9 million of cash distributed by the Joint Venture to each Venturer.

On January 1, 2008 as part of the restructuring, the Joint Venture distributed the majority of its’ net assets to the Venturers. The BioMarin Companies received $24.9 million in net assets and $18.8 million in cash. Genzyme received $37.1 million in net assets and $6.6 million in cash. During 2007, the Joint Venture distributed $17.1 million of cash to each Venturer in accordance with the terms of the Collaboration Agreement. The Venturers did not make any capital contributions to the Joint Venture in 2007 because the Joint Venture had sufficient cash to meet its financial obligations. In 2008, each Venturer contributed $1.8 million to cover the operating expenses.

I. 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 drugs 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.

J. 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,
	2008		2007		2006
Revenues:
U.S.	$	—	$	28,994	$	24,795
Europe		—		69,335		58,123
Other		—		25,342		13,373
Total	$	—	$	123,671	$	96,291

Prior to January 1, 2008, the Joint Venture’s results of operations were solely dependent on sales of Aldurazyme. BioMarin manufactures Aldurazyme at a single manufacturing facility in Novato, California and outsources the fill-finish process. The percentage of sales of Aldurazyme to distributors, as compared to total revenues in 2008, 2007 and 2006, were as follows:

	% of Total Revenues
	2008		2007		2006
Sales to Distributors:
U.S. distributors	—	%	9	%	11	%
European distributors	—	%	7	%	8	%
Other distributors	—	%	3	%	3	%
Total sales to distributors	—	%	19	%	22	%

The percentage of sales of Aldurazyme to two U.S. distributors, as compared to total revenues in 2008, 2007 and 2006, were as follows:

	% of Total Revenues
	2008		2007		2006
Sales to U.S. Distributors:
Distributor A	—	%	3	%	4	%
Distributor B	—	%	6	%	7	%
Total sales to U.S. distributors	—	%	9	%	11	%