United States
Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 For the quarterly period ended March 31, 2000 [ ] 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 or other jurisdiction of (I.R.S. Employer Identification No.)

incorporation or organization)

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

(415) 884-6700
(Registrant's telephone number, including area code)

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

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS Indicate by check mark whether the registrant filed all
documents and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. Yes ____ No_____ APPLICABLE ONLY TO CORPORATE
ISSUERS

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 35,354,921shares
common stock, par value $0.001, outstanding as of April 30, 2000.

BIOMARIN PHARMACEUTICAL INC.

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

Consolidated Balance Sheets..................................................2
Consolidated Statements of Operations........................................3
Consolidated Statements of Cash Flows........................................4
Notes to Consolidated Financial Statements..................................5

Item 2. Management's Discussion and Analysis...............................7

Item 3. Quantitative and Qualitative Disclosure about Market Risk.........12

PART II. OTHER INFORMATION

Item 1. Legal Proceedings..................................................23

Item 2. Changes in Securities and Uses of Proceeds.........................23

Item 3. Defaults upon Senior Securities....................................23

Item 4. Submission of Matters to a Vote of Security Holders................23

Item 5. Other Information..................................................23

Item 6. Exhibits and Reports on Form 8-K...................................24

SIGNATURE...................................................................26

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)
BioMarin Pharmaceutical Inc. and Subsidiaries
(a development-stage company)

Consolidated Balance Sheets as of
December 31, 1999 and March 31, 2000

($ Thousands)

December 31, March 31,
1999 2000
------------------- -----------------
(unaudited)

Assets
Current assets:
Cash and cash equivalents $ 23,413 $ 40,675
Short-term investments 39,573 14,999
Accounts receivable, net 1,047 1,109
Due from Glyko Biomedical Ltd. 139 163
Due from BioMarin/Genzyme LLC 1,280 3,734
Inventories 676 647
Prepaid expenses 294 225
------------------- -----------------
Total current assets 66,422 61,552
Property, plant and equipment, net 25,093 20,743
Goodwill and other intangible assets 11,462 11,159
Investment in BioMarin/Genzyme LLC 421 790
Deposits 151 246
------------------- -----------------
Total assets $ 103,549 $ 94,490
=================== =================

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,095 $ 1,367
Accrued liabilities 1,966 3,289
Notes payable - short-term 26 26
------------------- -----------------
Total current liabilities 5,087 4,682

Long-term liabilities:
Long-term portion of notes payable 85 77
------------------- -----------------

Total liabilities 5,172 4,759
------------------- -----------------

Stockholders' equity:
Common stock, $0.001 par value:
75,000,000 Authorized 34,832,578
and 35,305,921 shares issued and
outstanding at December 31, 1999
and March 31, 2000, respectively 35 35
Additional paid-in capital 146,592 149,412
Common stock warrants and options 128 128
Deferred compensation (2,591) (2,322)
Notes from stockholders (2,638) (2,638)
Deficit accumulated during the
development stage (43,149) (54,884)
------------------- -----------------

Total stockholders' equity 98,377 89,731
------------------- -----------------

Total liabilities and
stockholders' equity $ 103,549 $ 94,490
=================== =================

The accompanying notes are an integral part of these
statements.

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

Consolidated Statements of Operations
for the Three-Month Periods Ended March 31, 1999 and 2000 and for
the Period from March 21, 1997 (inception) to March 31, 2000
($ Thousands, except for per share data)

For the period
March 21, 1997
Three Months Ended March 31, (inception), to
-------------------------------------- March 31,
1999 2000 2000
-------------------- ------------------ --------------------
(unaudited) (unaudited) (unaudited)

Revenues:
Revenues - products $ 202 $ 469 $ 2,008
Revenues - services 47 50 247
Revenues from joint venture 746 2,756 8,893
Revenues - other 109 23 316
-------------------- ------------------ --------------------
Total revenues: 1,104 3,298 11,464

Operating Costs and Expenses:
Cost of products 84 148 559
Cost of services 18 33 194
Research and development 3,892 8,663 48,285
Selling, general and administrative 1,693 1,996 13,247
Carson Street closure - 4,423 4,423
-------------------- ------------------ --------------------
Total operating costs and expenses 5,687 15,263 66,708

Loss from operations (4,583) (11,965) (55,244)

Interest income 154 788 3,370
Interest expense - (2) (734)
Equity in loss of BioMarin/Genzyme LLC (180) (557) (2,277)
-------------------- ------------------ --------------------
Net loss (4,609) (11,736) (54,885)
==================== ================== ====================

Net loss per share, basic and diluted $ (0.18) $ (0.34) $(2.46)
==================== ================== ====================

Weighted average common shares outstanding 26,176 35,015 22,302
==================== ================== ====================

The accompanying notes are an integral part of these statements.

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

Consolidated Statements of Cash Flows
For the Three-Month Periods Ended March 31, 1999 and 2000,
and for the Period from March 21, 1997 (inception) to March 31, 2000

Period from
March 21, 1997
Three Months Ended (inception) to
March 31, March 31,
1999 2000 2000
------------ ------------ ------------

Cash flows from operating activities:
Net loss $ (4,609) $ (11,736) $ (54,885)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation 420 1,163 5,550
Amortization of deferred compensation 298 268 1,794
Amortization of goodwill 271 303 1,717
Compensation in the form of common stock
and common stock options - - 18
Loss from BioMarin/Genzyme LLC 180 3,304 10,324
Write off of in-process technology - - 2,625
Carson Street closure - 4,423 4,423
Changed in operating assets and liabilities:
Accounts receivable (36) (62) (1,109)
Due from Glyko Biomedical Ltd. (5) (24) (162)
Due from BioMarin/Genzyme LLC (210) (2,453) (3,733)
Inventories 12 29 (48)
Prepaid expenses (30) 69 (224)
Deposits (10) (95) (246)
Accounts payable (560) (1,728) 1,366
Accrued liabilities 184 696 2,662
------------ ------------ ------------
Total adjustments 514 5,893 24,957
------------ ------------ ------------
Net cash used in operating activities (4,095) (5,843) (29,928)

Cash flows from investing activities:
Purchase of property and equipment (2,781) (608) (30,087)
Purchase of Biochemical Research Reagent
Division of Oxford Glycosciences - - (1,500)
Investment in BioMarin/Genzyme LLC (642) (3,674) (11,115)
Sale/(purchase) of short-term investments 1,722 24,574 (14,999)
------------ ------------ ------------
Net cash provided by (used in)
investing activities (1,701) 20,292 (57,701)

Cash flows from financing activities:
Proceeds from note payable - - 134
Bridge loan - - 880
Proceeds from issuance of convertible
notes payable - - 25,615
Accrued interest on notes receivable
from stockholders (37) - (188)
Proceeds from exercise of common
stock options - 2,821 2,969
Repayment of equipment loan (6) (8) (32)
Proceeds from sale of common stock,
net of issuance costs - - 98,926
------------ ------------ ------------
Net cash provided by
(used in) financing activities (43) 2,813 128,304
------------ ------------ ------------

Net increase (decrease)in cash and
cash equivalents (5,839) 17,262 40,675
Cash and cash equivalents,
beginning of period 9,414 23,413 -
------------ ------------ ------------
Cash and cash equivalents, end of period $ 3,575 $ 40,675 $ 40,675
============ ============ ============

The accompanying notes are an integral part of these
statements.

BIOMARIN PHARMACEUTICAL INC. AND SUBSIDIARIES
(a development-stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION:
----------------------

BioMarin Pharmaceutical Inc. (BioMarin or Company) is a publicly-traded (Nasdaq
National Market and SWX New Market: BMRN) biopharmaceutical company specializing
in the development of carbohydrate enzyme therapies for debilitating,
life-threatening, chronic genetic disorders and other diseases or conditions.
Since inception, the Company has devoted substantially all of its efforts to
research and development activities, including preclinical studies and clinical
trials, the establishment of laboratory and clinical scale manufacturing
facilities, clinical manufacturing, and related administrative activities.
BioMarin was incorporated in October 1996 as a wholly-owned subsidiary of Glyko
Biomedical Ltd. (GBL). The Company was funded by GBL and began operations on
March 21, 1997 (inception). In October 1998, the Company acquired Glyko, Inc., a
wholly-owned subsidiary of GBL, in a transaction valued at $14.5 million.

The Company completed its Initial Public Offering (IPO) of 4.5 million shares of
common stock at $13.00 per share on July 23, 1999, raising net proceeds of
approximately $51.9 million. In a private placement concurrent with the IPO,
Genzyme invested $10 million at the IPO price of $13 per share (769,230 shares
of common stock). In addition, the $26 million of convertible notes sold by the
Company on April 13, 1999, plus accrued interest, were converted into 2,672,020
shares of common stock at $10 per share. The underwriters' over-allotment
exercise of 675,000 shares in August 1999 raised additional net proceeds of $8.1
million at the IPO price.

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information on substantially the same basis as the annual audited
financial statements. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
of normal recurring adjustments, considered necessary for a fair presentation
have been included. Operating results for the three-month period ended March 31,
2000 are not necessarily indicative of the results that may be expected for the
year ending December 31, 2000. These consolidated financial statements should be
read in conjunction with the financial statements and footnotes thereto for the
year ended December 31, 1999 included in the Company's Form 10-K Annual Report.

2. SIGNIFICANT ACCOUNTING POLICIES:
--------------------------------

Use of Estimates

The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that effect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the
dates of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of amounts held with banks and short-term
investments with original maturities of 90 days or less.

Short-term Investments

The Company records its investment securities as available-for-sale because the
sale of such securities may be required prior to maturity. These securities are
recorded at March 31, 2000 at cost, which approximates fair market value. These
securities are comprised mainly of Federal Agency investments including Federal
National Mortgage and Federal Home Loans and bank certificates of deposit.

Property and Equipment

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

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

December 31, March 31, Estimated
1999 2000 Useful Lives
------------------ ------------------ ------------------

Computer hardware and software $ 426 $ 429 3 years
Office furniture and equipment 1,017 899 5 years
Manufacturing/laboratory equipment 8,254 7,309 5 years
Leasehold improvements 19,768 16,623 Shorter of life of
asset or lease term
------------------ ------------------
29,465 25,260
Less: Accumulated depreciation (4,372) (4,517)

------------------ ------------------
Total, net $ 25,093 $ 20,743
================== ==================

Research and Development

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

Net Income (Loss) per Share

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

Use of Estimates

The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that effect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the dates
of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of amounts held with banks and short-term
investments with original maturities of 90 days or less.

3. CARSON STREET CLOSURE:
----------------------

During the first quarter of 2000, the Company decided to close its Carson
Street clinical manufacturing facility. In connection with this decision, the
Company recorded a charge of approximately $4.4 million for the closure of
its Carson Street clinical manufacturing facility. The facility was no
longer required for the production of Aldurazyme(TM), the initial purpose
of the plant, after a decision by the BioMarin/Genzyme LLC (joint venture)
to use the Company's Galli Drive facility for the manufacture of bulk
Aldurazyme(TM) both for the confirmatory Phase III trial and for the commercial
launch of Aldurazyme(TM). This decision was based in part on U.S. Food and
Drug Administration guidance to use an improved production process, which
was installed in the Galli facility, for the clinical trial and biologics
license application submission and for commercial production. The Carson
Street facility is expected to complete its final production lots in May.
The Company expects that a majority of its technical staff at the Carson
Street facility in Torrance, California will transfer to the Galli Drive
facility in Novato, California, which has significantly greater manufacturing
capacity. The charge primarily consisted of write-downs of leasehold
improvements and equipment located in the Carson Street facility.

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

FORWARD-LOOKING STATEMENTS

The following discussion and analysis of financial condition and results
of operations contains "forward-looking statements" as defined under
securities laws. These statements can often be identified by the use of
terminology such as "believes," "expects," "anticipates," "plans," "may,"
"will," "projects," "continues," "estimates," "potential," "opportunity"
and so on. These forward-looking statements may be found in the "Risk
Factors," and other sections of this document. Our actual results or
experience could differ significantly from the forward-looking
statements. Factors that could cause or contribute to these differences
include those discussed in "Risk Factors," as well as those discussed
elsewhere in this document.

Overview

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

We have incurred net losses since inception and had an accumulated deficit
through March 31, 2000 of $54.9 million. Our losses have resulted primarily from
research and development activities and related administrative expenses. We
expect to continue to incur operating losses at least through 2001.

To date, we have not generated revenues from the sale of our drug candidates.
Our lead product is Aldurazyme(TM), alronidase for injection, (recombinant human
(alpha)-L-iduronidase), which is undergoing clinical trials for use in enzyme
replacement therapy for Mucopolysaccharridosis-I or MPS-I. Our financial results
may vary depending on many factors, including:

. The progress of Aldurazyme(TM) in the regulatory processes and initial
sales activities

. The investment in manufacturing process development and in
manufacturing capacity for Aldurazyme(TM) and other product candidates

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

. The progress of our additional research and development efforts

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

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

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

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

Results of Operations

The Quarters Ended March 31, 2000 and 1999

Revenues for the first quarter of 2000 totaled $3.3 million compared to revenues
of $1.1 million in the first quarter of 1999. First quarter 2000 revenues
included $2.8 million for services provided to the joint venture for
Aldurazyme(TM) compared to $746,000 in the same period in 1999. The increase was
primarily the result of increased services provided to the joint venture for the
start-up of manufacturing operations in the Galli Drive facility in preparation
for the supply of clinical trial material while also running the Carson Street
facility. First quarter 2000 revenues also included $519,000 generated by Glyko,
Inc. compared to $249,000 for the first quarter of 1999. Glyko's external
revenues for products and services for the first quarter of 2000 were up 108% in
comparison to the first quarter of 1999 as a result of product sales from the
biochemical reagents business of Oxford GlycoScience Plc. (LSE: OGS), which was
acquired in May 1999. Other revenues decreased from $109,000 in the first
quarter of 1999 to $23,000 in the first quarter of 2000 due to the reduction in
governmental grant revenue for Glyko, Inc. programs.

Cost of products and cost of services related to Glyko, Inc. operations were
$181,000 in the first quarter of 2000 and were $102,000 in the comparable period
of 1999. Glyko's total external product and service costs as a percent of the
sales of products and services were 35% in the first quarter of 2000 and 41% in
the first quarter of 1999. The improvement was due to a favorable mix, with a
greater percentage of higher margin product sales.

Research and development expenses for the first quarter of 2000 increased by
$4.8 million from $3.9 million in the first quarter of 1999 to $8.7 million in
the first quarter of 2000. This increase was due primarily to increased
activities in support of the joint venture for Aldurazyme(TM) and in support of
the Company's enzyme product candidates for MPS-VI and burn debridement.

Selling, general and administrative expenses increased from $1.7 million in the
first quarter of 1999 to $2.0 million in the first quarter of 2000 due to
increased administrative staff expenses to support expanded operations and
expenses associated with its new status as a publicly traded company.

The Company's equity in the loss of its joint venture with Genzyme was $557,000
for the first quarter 2000 compared to $180,000 for the same period of 1999.

Interest income increased by $634,000 from $154,000 in the first quarter of 1999
to $788,000 in the first quarter of 2000 due to increased cash reserves
resulting from the initial public offering on July 23, 1999, a concurrent
investment by Genzyme, and a convertible note financing in April 1999.

Net loss of $4.6 million ($0.18 per share) in the first quarter of 1999
increased to $11.7 million ($0.34 per share) in the comparable period of 2000.

Liquidity and Capital Resources

We have financed our operations since our inception by the issuance of common
stock and convertible notes and the related interest income earned on cash
balances available for short-term investment. Since inception, we have raised
aggregate net proceeds of approximately $124 million after the IPO and
concurrent Genzyme investment. We were initially funded by GBL with a $1.5
million investment. We have since raised additional capital from the sale of
common stock in private placements, in the sale of promissory notes convertible
into common stock, in an investment of $8.0 million by Genzyme as part of our
joint venture with them, in an initial public offering including the
underwriters' over-allotment exercise and in the concurrent $10 million Genzyme
investment in our Company.

Our combined cash, cash equivalents and short-term investments totaled $55.7
million at March 31, 2000, a decrease of $7.3 million from December 31, 1999.
The primary use of cash during the quarter ended March 31, 2000 was to finance
operations, fund to the joint venture and to purchase equipment and leasehold
improvements. The primary source of cash was the issuance of common stock
pursuant to the exercise of stock options under the 1997 Stock Plan. For the
quarter ended March 31, 2000, operations used $5.7 million, we invested $3.7
million in the joint venture (which was consumed in joint venture operations),
we purchased $0.7 million of equipment and leasehold improvements and we raised
$2.8 million from the exercise of stock options.

From our inception through March 31, 2000, we have purchased approximately $30.2
million of leasehold improvements and equipment. We expect that our investment
in leasehold improvements and equipment will increase significantly during the
next two years because we will provide facilities and equipment for a larger
staff and increase manufacturing capacity.

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

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

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

As of March 31, 2000, we had expended to date approximately $800,000 on the
in-process research and development projects and $875,000 on the diagnostic
projects. If all acquired in-process research and development projects proceed
to completion, we expect to spend approximately $310,000 in incremental direct
expense to complete the analytic projects in phases over approximately 12
months. We expect to spend approximately $850,000 to complete the diagnostic
projects in phases to be completed within the next 18 months. None of these
projects have been terminated to date.

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

We have made and plan to make substantial commitments to capital projects,
including expanding the Aldurazyme(TM) manufacturing facility in Novato and
developing new research and development facilities in Novato.

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

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

On April 13, 1999, we sold a total of $26.0 million of convertible promissory
notes. The notes plus accrued interest were converted into 2,672,020 shares of
our common stock at a conversion price of $10.00 per share concurrent with the
IPO.

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

In July 1999, we completed our initial public offering of 4.5 million shares of
our common stock at $13 per share raising net proceeds of approximately $51.8
million. In a private placement concurrent with the IPO, Genzyme purchased $10
million of our common stock (769,230 shares) at the IPO price of $13.

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

We expect our current funds to last at least through mid-year 2001. Until we can
generate sufficient levels of cash from our operations, we expect to continue to
finance future cash needs through:

. The sale of equity securities

. Equipment-based financing

. Collaborative agreements with corporate partners

We do not expect to generate positive internal cash flow for at least through
2001 because we expect to increase operational expenses and manufacturing
investment for the joint venture and to increase research and development
activities, including:

. Preclinical studies, clinical trials and regulatory review

. Commercialization of our drug candidates

. Development of manufacturing operations

. Process development

. Scale-up of manufacturing facilities

. Sales and marketing activities

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

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

. The progress of our research and development programs

. The progress of preclinical studies and clinical trials

. The time and cost involved in obtaining regulatory approvals

. Scaling up, installing and validating manufacturing capacity

. Competing technological and market developments

. Changes and developments in collaborative, licensing and other
relationships

. The development of commercialization activities and arrangements

. The leasing and build-out of additional facilities

. The purchase of additional capital equipment

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

RISK FACTORS

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

We are in an early stage of development and have operated at a net loss since we
were formed. Since we began operations in March 1997, we have been engaged
primarily in research and development. We have no sales revenues from any of our
drug products. As of March 31, 2000, we had an accumulated deficit of
approximately $54.9 million. We expect to continue to operate at a net loss at
least through 2002. Our future profitability depends on our receiving regulatory
approval of our drug candidates and our ability to successfully manufacture and
market any approved drugs, either by ourselves or jointly with others. The
extent of our future losses and the timing of profitability are highly
uncertain. If we fail to become profitable or are unable to sustain
profitability on a quarterly or annual basis, then we may be unable to continue
our operations.

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

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

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

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

o research and development programs

o preclinical studies and clinical trials

o regulatory processes

o establishment of commercial scale manufacturing capabilities and

o expansion of sales and marketing activities.

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

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

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

o The time and cost necessary to obtain regulatory approvals

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

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

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

o Any new collaborative, licensing and other commercial
relationships that we may establish
12

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

o additional leases for new facilities and capital equipment

o additional licenses and collaborative agreements

o additional contracts for consulting, maintenance and
administrative services

o additional expenses associated with being a public company.

We believe that the cash, cash equivalents, short-term investment securities
balances at March 31, 2000 will be sufficient to meet our operating and capital
requirements through mid-year 2001. This estimate is based on assumptions and
estimates, which may prove to be wrong. As a result, we may need or choose to
obtain additional financing during that time.

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

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

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

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

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

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

o Slow patient enrollment

o Longer treatment time required to demonstrate efficacy

o Lack of sufficient supplies of the drug candidate

o Adverse medical events or side effects in treated patients

o Lack of effectiveness of the drug candidate being tested

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The patent positions of biotechnology companies are extremely complex and
uncertain. The scope and extent of patent protection for some of our products
are particularly uncertain because key information on some of the enzymes we are
developing has existed in the public domain for many years. Other parties have
published the structure of the enzymes, the methods for purifying or producing
the enzymes or the methods of treatment. The composition and genetic sequences
of animal and/or human versions of many of our enzymes, including those for
AldurazymeTM and BM102, have been published and are in the public domain. The
composition and genetic

sequences of other MPS enzymes which we intend to develop as products have also
been published. Publication of this information may prevent us from obtaining
composition of matter patents, which are generally believed to offer the
strongest patent protection. For enzymes with no prospect of composition of
matter patents, we will depend on orphan drug status.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Upon termination of the joint venture one party must buy out the other party's
interest in the joint venture. The party who buys out the other will then also
obtain, exclusively, all rights to AldurazymeTM and any related intellectual
property and regulatory approvals.

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

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

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

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

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

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

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

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

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

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

o Production yields

o Purity

o Quality control and assurance

o Shortages of qualified personnel

o Compliance with FDA regulations

We have developed a total of 31,000 square feet at our Novato facility for phase
1 of manufacturing capability for AldurazymeTM. The "shakedown" runs of this
facility may take longer than planned. We expect that the manufacturing process
of all of our new products, including BM102, will also require lengthy
development time before we can begin manufacturing them in commercial quantity.
Even if we can establish this capacity, we cannot be certain that manufacturing
costs will be commercially reasonable, especially if reimbursement is
substantially lower than expected.

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

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

o improving the processes licensed from others, or

o developing a recombinant cell line and production
processes.

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

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

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

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

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

If we fail to compete successfully, our revenues and operating results will be
adversely affected.

Our competitors may develop, manufacture and market products that are more
effective or less expensive than ours. They may also obtain regulatory approvals
for their products faster than we can obtain them, including orphan drug
designation, or commercialize their products before we do. If our competitors
successfully commercialize a product which treats a given rare genetic disease
before we do, we will effectively be precluded from developing a product to
treat that disease because the patient populations of the rare genetic diseases
are so small. These companies also compete with us to attract qualified
personnel and parties for acquisitions, joint ventures or other collaborations.
They also compete with us to attract academic research institutions as partners
and to license these institution's proprietary technology. If our competitors
successfully enter into partnering arrangements or license agreements with
academic research institutions, we will then be precluded from pursuing those
specific opportunities. Since each of these opportunities is unique, we may not
be able to find a substitute. Several pharmaceutical and biotechnology companies
have already established themselves in the field of enzyme therapeutics,
including Genzyme, our joint venture partner. These companies have already begun
many drug development programs, some of which may target diseases that we are
also targeting, and have already entered into partnering and licensing
arrangements with academic research institutions, reducing the pool of available
opportunities.

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

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

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

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

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

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

Because of the specialized scientific nature of our business, we rely heavily on
our ability to attract and retain qualified scientific, technical and managerial
personnel. In particular, the loss of Grant W. Denison, Jr., Chairman and Chief
Executive Officer, John C. Klock, M.D., President and Secretary or Christopher
M. Starr, Ph.D., Vice President for Research and Development would be
detrimental to us if we cannot recruit suitable replacements in a timely manner.
While each of these individuals is party to an employment agreement with us,
which includes financial incentives for each of them to remain employed with us,
these agreements each terminate in June 2000 and we cannot guarantee that any of
them will remain employed with us beyond that time. In addition, these
agreements do not restrict their ability to compete with us after their
employment is terminated. Dr. Klock has notified us that he intends to resign as
president and secretary effective July 30, 2000, although he intends to remain
as a director if reelected at the annual shareholder's meeting. The competition
for qualified personnel in the biopharmaceutical field is intense. We cannot be
certain that we will continue to attract and retain qualified personnel
necessary for the development of our business.

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

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

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

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

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

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

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

o Developments or disputes concerning patent or
proprietary rights

o General market conditions for emerging growth and
biopharmaceutical companies

o Economic conditions in the United States or abroad

o Actual or anticipated fluctuations in our operating
results

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

o Changes in financial estimates by securities analysts

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

o trading in different time zones

o different ability to buy or sell our stock

o different trading volume

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

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

Our directors and officers control approximately 13.9% of the outstanding shares
of our common stock. Glyko Biomedical Ltd. or GBL owns 32.2% of the outstanding
shares of capital stock. Three of six GBL directors are officers or directors of
the Company. As a result, due to their concentration of stock ownership,
directors and officers, together with GBL if they act together, may be able to
otherwise control our management and operations, and may be able to prevail on
all matters requiring a stockholder vote including:

o The election of all directors

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

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

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

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

Item 3. Quantitative and Qualitative Disclosure about Market Risk.

The Company's exposure to market risk for changes in interest rates relates
primarily to the Company's investment portfolio. The Company places its
investments with high credit issuers and by policy limits the amount of credit
exposure to any one issuer. As stated in its policy, the Company will seek to
improve the safety and likelihood of preservation of its invested funds by
limiting default risk and market risk. The Company has no investments
denominated in foreign country currencies and therefore is not subject to
foreign exchange risk.

The Company mitigates default risk by investing in high credit quality
securities and by positioning its 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.

The table below presents the carrying value for the Company's investment
portfolio. The carrying value approximates fair value at March 31, 2000.

Investment portfolio:

Carrying value
(in $ thousands)
----------------

Cash and cash
equivalents..............$40,675

Short-term
investments.............. 14,734*

Certificates of
deposit......................265

Total.................$55,674

* 100% in United States agency securities.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings. None.

Item 2. Changes in Securities and Uses of Proceeds. None.

Item 3. Defaults upon Senior Securities. None.

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

Item 5. Other Information. None.

Item 6. Exhibits and Reports on Form 8-K.

(a) The following documents are filed as part of this
report

See Exhibit Index attached hereto.

(b) Reports on Form 8K

No reports were filed on Form 8-K during the three months
ended March 31, 2000.

EXHIBIT INDEX

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

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

EXHIBIT INDEX

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

10.25 Purchase Agreement with Genzyme Corporation dated
September 4, 1998. (1)
10.26 Subscription Agreement with Genzyme dated September 4,
1998. (1)
10.27 Form of Convertible Note Purchase Agreement dated
as of April 12, 1999 with form of convertible
promissory note. (1)
10.28 Astro License Agreement dated December 18, 1990 among
Glyko, Inc., Astromed, Ltd., and Astroscan, Ltd. (3)
10.29 Glycomed License Agreement dated December 18, 1990
between Glyko, Inc., and Glycomed, Inc. (3)
10.30 Operating Agreement with Genzyme Corporation. (2)
10.31 Lease Agreement dated March 15, 2000 for 11 Pimentel
Court.
21.1 List of Subsidiaries. (1)
23.1 Consent of Independent Public Accountants.
27.1 Financial Data Schedule (available in EDGAR format only)

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

SIGNATURE

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

BIOMARIN PHARMACEUTICAL INC.

Dated: May 12, 2000 By: /s/ Raymond W. Anderson
--------------------------------- ---------------------------------
Raymond W. Anderson
Chief Financial Officer and
V.P. Finance and Administration