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Presentation

Biogen Inc. misses on earnings expectations. Reported EPS is $3.02 EPS, expectations were $3.26.

Operator: Good morning. My name is Melinda, and I’ll be your conference operator today. At this time, I’d like to welcome everyone to the Biogen First Quarter 2025 Earnings Call and Business Update. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Today’s conference is being recorded. Thank you. I would now like to turn the conference over to Mr. Tim Power, Head of Investor Relations. Mr. Power, you may begin your conference.

Tim Power: Thanks, Melinda. Good morning, and welcome to Biogen’s first quarter 2025 earnings call. During this call, we will make forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review. Our earnings release and other documents related to our results as well as reconciliations between GAAP and non-GAAP results discussed on this call can be found in the Investors section of biogen.com. We’ve also posted the slides to our website that we’ll be using during the call. On today’s call, I’ll be joined by our President and Chief Executive Officer, Chris Viehbacher; Dr. Priya Singhal, our Head of Development; and Robin Kramer, our Chief Financial Officer.

We’ll make some opening comments and then we’ll move to the Q&A session. And to allow us to get through as many questions as possible, we kindly ask that you limit yourself to one question. I’ll now turn the call over to Chris.

Chris Viehbacher: Thank you, Tim. Good morning, everybody. Maybe first a warm welcome to Robin. This is your first quarter as CFO of Biogen, Robin. So, we had a very good start to the year, strong quarter. Biogen is really a tale of two companies, in my view. There’s one company which has been an MS company, and that portfolio, as you all know, it’s been gradually declining. But there’s a new Biogen emerging. And when I look at the rare disease business [in AD] (ph), ZURZUVAE and LEQEMBI, and VUMERITY, we actually have a commercial portfolio that we’re actively promoting that’s now gotten to be about 45% of our product revenue. And those products mostly have a very long runway to continue to grow. And so, we’ve been talking about it for a few years, but I think now this is actually starting to become visible.

We’re rolling these products out worldwide. We had the approval of LEQEMBI in Europe, for example, which is very important approval for us. But we’ve also seen the approval of SKYCLARYS in the UK and Brazil. Of course, the next lever of growth is going to be our pipeline. And there we’re very happy to get the FDA Fast Track designation for our ASO targeting BIIB080. That’s remarkable since that we haven’t actually even read out Phase 2 yet. And I think it’s a sign of confidence in the importance of this potential new medicine in treatment of Alzheimer’s. And of course, we’ve initiated the Phase 3 TRANSCEND study for felzartamab in AMR. And of course, we’ve always said we’ve got a very strong balance sheet. We’re going to continue to patiently and in a disciplined way augment the pipeline through external innovation.

And we’re very happy about the partnership that we built with — on zorevunersen in Dravet syndrome with Stoke. That’s going to be an important medicine. We have that for the territories outside the United States. Now, if we turn to where we are on these new product launches. So, LEQEMBI, I mean look at that, $96 million, that’s almost $100 million. Now, we’re into serious product territory. We have, as I said, obtained the marketing authorization in the EU. And it’s important not just because of the market potential in the EU, but now we can say that this is a drug that has been recognized for its importance, its efficacy, its safety profile by all major regulators in the world. And that’s an important sign of confidence. This is again the first disease-modifying agent that has ever been approved in Alzheimer’s.

This is a brand new territory. And I think having that kind of regulatory endorsement is extremely important. Now, as we all know, this has been a challenging product to launch, given the workload that this applies for the treating physician. And we’re looking very much forward to a number of the innovations that are coming along that we think can actually reduce that workload. First, of course, is one we have in the bag in the first quarter, which was the approval for the IV maintenance, which will allow us to reduce the dosing for patients after 18 months of treatment to once per month. Then, we’re going to make that even easier for physicians with hopefully an approval in August for the subcutaneous formulation, and that offers the potential of at-home administration with an auto injector.

And of course, in the first half of next year, we’re looking forward to the approval, hopefully again, of the subcutaneous formulation for initiation, which will dramatically reduce the need for infusion bed capacity. In addition, of course, this isn’t related to Eisai or Biogen, these are independent companies, but there are companies who are pursuing approval for biomarker tests, blood-based biomarker tests. And hopefully at some point, we’ll be able to see those blood-based biomarkers supplant the need for PET scans and/or lumbar punctures. So, there’s an awful lot of catalyst coming for LEQEMBI, but we’re very much encouraged now that we’ve got critical mass behind this. We’ve also launched a new approach on commercialization from April 1.

We and our partners Eisai have spent a lot of time going back through the data, thinking about the lessons learned and have adapted our commercial approach. And one of the things, for instance, that we will be doing this year is now starting direct patient engagement in Alzheimer’s. Now, switching to ZURZUVAE, this is a product that continues to do nicely with Q1 sales of $28 million. Since launch, we have now been able to treat 10,000 women with PPD, and the majority of those prescriptions are actually first line therapy for postpartum depressions. A lesson that we learned along the way was actually the physician who is the most important in treating postpartum depression is actually not the psychiatrist, but the OB-GYN. So, 80% of our scripts in Q1, for instance, were from OB-GYNs. One of the most important things here is you’re talking about a one-and-done treatment essentially.

And so, to make this commercially viable, you actually need to have writers expand and we did see that. So, we were able to expand the number of physicians writing this by 20% in Q1. But more importantly, it’s getting physicians to write repeat prescriptions. And one of the most encouraging things is that we’re not only seeing the repeat prescriptions, but I think as physicians gain the experience with ZURZUVAE, they’re also gaining the confidence to actually go and be more proactive about diagnosing postpartum depression. And so, I think we’re actually seeing a virtuous cycle here where this positive response by patients is encouraging a greater attention to a disease that unfortunately I think has been sadly neglected for so many women. So, very good progress on ZURZUVAE.

We’ve completed our own field expansion at Biogen and that’s been in place since the middle of the quarter. Now, if I turn to SKYCLARYS, we had worldwide sales of $124 million; that’s up 59% year-over-year and 21% quarter-on-quarter. We did have some effect from the IRA. You all know about the Medicare tax that has been put in place and that had an effect. Actually our gross sales in the U.S. rose faster than our net sales in this quarter. One of the things about this disease, of course, is that this is in European origin as a genetic disease. And essentially where you find the patients is where all the European explorers went in the world. And — but logically, of course, and the biggest number of patients is in Europe. And there we have had an awful lot of success in finding patients.

It’s actually I think easier to find them in Europe because they tend to be in centers, whereas they tend to be all over the country in the U.S. But even in U.S., our U.S. team has been very creative in thinking about new tools to identify where patients are and find them. I can remember years ago with the acquisition of Genzyme learning the key marketing component of rare disease and that is finding needles in haystacks. And that’s what this is all about is looking through social media, following family trees and looking for patients. And so, how are we doing on that? If I could see the next slide, you can see that we’ve got a nice steady growth in patient numbers. We’ve got about 2,400 patients on therapy globally. It’s now available in 26 markets.

I would caution that not all of those patients yet are paying patients. We have had an approach of having early access [Technical Difficulty] much higher than the average analog rare disease launch. And actually in line pretty much with the SPINRAZA launch, I wasn’t here for that, but as we’ve gone back and looked at it, the SPINRAZA launch was actually one of the best, if not the best launch of a rare disease product. So, we’re very happy with the progress of SKYCLARYS. Brazil approval is actually a very important market for us. There are a lot of patients in Brazil, again, going back to where Europeans went in the world. And having been in Brazil last year and met with a number of physicians, I know that this approval will be very welcome to patients there.

Moving on to the pipeline, I think, we made an awful lot of progress here as well. I mean, you’ve heard me say, I think, time and time again that I think we had an extremely high-risk pipeline. When I came here, first of all, it was highly concentrated in neuroscience. And that’s always an issue when you only have one therapeutic area. But neuroscience was also a little complicated because we don’t always understand the underlying disease biology. The slowly progressing nature of those diseases mean that you often couldn’t do a Phase 2 study. And so, you go immediately into a Phase 3 study. So, you end up doing incredibly expensive proof-of-concept studies as Phase 3. Now, neuroscience is who we are and we’ve not wanted to abandon that by any means, there’s huge unmet need.

But we did feel that we needed to add another pillar to our company’s future growth. And the logical place to go was immunology. We’ve been in immunology since the founding of our company, particularly through MS. And I quote my good friend and former colleague, Elias Zerhouni, who often said, we describe too many diseases by their symptoms and not by their cause. And when you get into immunology, actually, what’s important is really the immune pathways. And that can lead you into a whole number of different indications. And that is something that Biogen actually understands very well. And so, you can see on the left chart, we’ve been able to balance this now. We have got a nice balance between neurology, which has been the pride and home of Biogen for many years, but also I think immunology, where I think we have a very strong right-to-play.

And then, of course, with that concomitantly, if you look at the right chart, in immunology, one of the things you can do is do a proof of concept. And felzartamab is probably the best example of that. That is an ideal product where we’ve been able to get a very strong proof of concept. There is never a guarantee in any clinical trial as all of you know. But I think as we look at the Phase 3 clinical trials for felzartamab that we feel a whole lot more confident about that than some of the other trials where, again, we haven’t had that. And so, as you look at our pipeline, I think if I could go to the next chart, first thing I would point out, we have five Phase 3 studies that are initiating this year. And that’s important from a number of points of view.

First is, obviously, there’s a huge potential that is behind all of those products and we’re getting into late-stage development. So, it’s a sign of maturation of our pipeline. But the second thing is, we’re also increasing the number of shots on goal. We’re not dependent on one or two projects. And we’re going to continue to build that. And I guess, the third thing I would point out is, we have a number of data readouts that are coming. And so, as we move into Phase 3, we’ll be able to also have some important readouts already in 2026. And I think that’s a nice cadence that is going to help underpin the continued emergence of that new Biogen. So, I think very good progress, and Priya is going to talk more about that. And then, I guess, the last topic I would just cover is one that I think is on everybody’s mind, which is tariffs.

It’s a new topic for us all. In 35 years in this industry, I’ve never had to spend as much time as we as a team have on tariffs in the first quarter. This is a very complicated area and I know for investors this is very complicated. And I did want to point out a number of features of Biogen, which I think differentiate Biogen from some of our colleague companies in the industry. And a number of you have been using, for instance, the tax rate as a surrogate for what the tariff exposure might be. And I would submit to you that that’s actually not appropriate in the case of Biogen. And it’s for a couple of important reasons. The first is that when you look at our product sales, 75% of our 2024 U.S. product revenue was attributable to products that already have manufacturing operations in the U.S. And in fact, Biogen actually exports more than we import.

And as a result also, we also pay an awful lot of tax and Robin will talk about that. We pay taxes in the U.S. at federal and state rates. But the other structural difference is that approximately 55% of our 2024 product revenue came from countries outside the U.S. Now that’s pretty unusual in our business. In most of this industry, what you see is 60% to 80% of product revenues come from the U.S. Biogen is a whole lot more diversified and that’s really a function of the products that we have. So, as we look out for 2025, obviously, there is an exemption for the moment in place and we know that the whole tariff situation is changing daily and it’s difficult to predict. But at least what we can say is, even if we lost the exemption and all of those tariffs that were announced by the U.S. administration on [April 22] (ph) were to actually not only come into being, but also apply to pharmaceuticals, this would still not affect our 2025 financial outlook.

That’s partly because of the long supply chains we have. It’s partly because — and I have to credit our supply chain team, they built levels of inventory, not just of products, but also of different ingredients and materials, because again, this is highly complex area. But just structurally, we are more of a U.S.-based company and always have been and actually we’re quite proud of that. So, with that, I’m going to pass it on to Priya to pick up the story on R&D.

Priya Singhal: Thank you, Chris. This quarter, we made significant progress advancing and expanding our high-conviction late-stage pipeline. We believe our pipeline will play a critical role as we work to deliver sustainable long-term growth enabled by increased momentum in our data flow. This includes potential key approvals this year and expected registrational data starting next year. This quarter, we delivered key milestones across Alzheimer’s, immunology and rare disease. First, as Chris mentioned, our tau targeting ASO BIIB080 received Fast Track designation from the FDA in Alzheimer’s disease in April. Alzheimer’s is a complex and fatal disease that we believe will require multiple therapeutic approaches to address its diverse pathologies.

BIIB080 is a differentiated approach to targeting tau and the Fast Track designation was based on encouraging Phase 1b data, which showed dose-dependent CSF tau reductions, decreases in tau PET signal and favorable trends on exploratory cognitive and functional measures. In immunology, we initiated the TRANSCEND Phase 3 study of felzartamab in AMR. This is the first of three Phase 3 studies that we expect to initiate this year for felzartamab with additional studies in IgAN and PMN anticipated by midyear. And importantly, we expanded our late-stage rare disease pipeline where we acquired rights to zorevunersen in Dravet syndrome in all territories outside the United States, Canada and Mexico. Dravet syndrome is a developmental and epileptic encephalopathy, characterized by severe recurrent seizures and importantly significant cognitive and behavioral impairments.

Importantly, more than 90% of patients continue to experience seizures despite treatment with the best available anti-seizure medicines, and there are currently no medications approved that meaningfully address the underlying cognitive and behavioral aspects of the disease. Zorevunersen is an investigational ASO that is designed to potentially for the first time treat the underlying cause of Dravet syndrome by increasing the Nav1.1 protein production in brain cells. What encourages us about this asset is the Phase 1/2a data that we’ve seen, specifically in respect to cognition and behavior as well as seizure. And looking at the right-hand side of the slide, you can see why. Scores on the Vineland-3, a widely-used standardized assessment of behavioral outcomes, show that zorevunersen resulted in substantial improvements across multiple measures of cognition and behavior.

This was initially observed within the Phase 1/2a study with continued improvement in the open-label extensions out to two years. We believe these results support the potential for zorevunersen to be the first disease-modifying therapy in Dravet syndrome. We look forward to working with Stoke on advancing the Phase 3 EMPEROR study, which we expect to initiate in the next few months. We continue to remain focused on advancing the standard of care in Alzheimer’s and I believe we’ve made significant progress. Starting with LEQEMBI, we are really excited about the recent approval in Europe. We’re also continuing to advance the subcutaneous formulation for both treatment maintenance and initiation to further aid patient optionality and convenience.

Furthermore, we believe that the strength of the LEQEMBI real-world data continues to support the urgency to treat symptomatic early AD patients today. And we look forward to the potential of blood-based diagnostics to help remove barriers in the healthcare system. I also believe it is important that we continue to execute on the opportunity in presymptomatic AD. Clarity AD established that removing plaque in a symptomatic early AD population leads to clinical benefit, and that symptomatic patients with low or no tau can potentially achieve an even greater benefit. And we believe AHEAD 3-45 is the right study design to evaluate the potential benefit of LEQEMBI in a true presymptomatic population. Beyond LEQEMBI, we continue to treat target Alzheimer’s disease biology with the potential next wave of therapies, including BIIB080 and novel delivery technologies.

Overall, I’m encouraged by the progress we’re making in Alzheimer’s and believe we are well-positioned to lead the evolution of the treatment landscape. Turning to the pre-proof-of-concept pipeline, I’m excited again about the progress we’ve made in rebuilding this area of the pipeline. We are applying a strong scientific rationale as we invest in these programs using a disciplined data-driven decision-making approach as we aim to build out a sustainable pipeline with a promising pre-POC pipeline. During this quarter, we made significant progress in this area, including completing enrollment in the Phase 2 study for our LRRK2 inhibitor for idiopathic Parkinson’s disease with Denali. Applying our approach to follow the science, these Phase 2 data, which are expected next year, will help provide us with clarity on the potential path forward to Phase 3.

We will continue to maintain this approach as we work to grow the pipeline by introducing more assets into the early-stage development, both from our organization as well as external innovation sources. With that, I would now like to hand the call over to Robin for a financial update.

Robin Kramer: Thank you, Priya. I’m pleased to be participating in my first earnings call since stepping into the CFO role. I’d like to begin by extending my gratitude to those in the investment community with whom I’ve had the pleasure of speaking with in my first few months as CFO, and I’m looking forward to spending time with many more of you in the near future. To start, I would like to provide a few highlights on our first quarter financial results. Please note, the comparisons I’m about to make are versus the first quarter of 2024, unless otherwise noted. Total revenue for the first quarter of $2.4 billion was up 6% year-over-year, aided in part by the timing of SPINRAZA and corporate partner revenue shipments. Our four launch products delivered approximately $200 million of revenue in the first quarter, an increase of 22% quarter-over-quarter and more than doubling year-over-year.

First quarter non-GAAP diluted EPS was $3.02, which was down 18%. This includes the $165 million upfront paid in connection with the Stoke transaction, which impacted EPS by approximately $0.95 in the quarter. Absent that charge, first quarter non-GAAP diluted EPS would have been $3.97, up 8% year-over-year. In the first quarter, we generated $222 million of free cash flow, which includes the $165 million upfront paid to Stoke. We ended the quarter with $2.6 billion of cash. Shortly, I will provide an update on our full year guidance. Now, I’ll turn to a few comments on revenue and commercial dynamics in the first quarter. Starting with our MS franchise, our global product revenue declined 11% year-over-year, driven primarily by competition.

This included impacts from a biosimilar for TYSABRI in Europe and generic competition for TECFIDERA globally. We have started to see generics launch in certain countries in Europe, such as France and the Netherlands. While we will continue to vigorously defend our IP, we do expect to see further impacts from TECFIDERA generics in Europe this year. A bright spot for MS in Q1 was VUMERITY, where we saw an increase in demand and VUMERITY remains the #1 branded oral therapy. For SPINRAZA, we continue to be encouraged by the consistency and demand globally, which includes growth in the U.S. of 4% year-over-year. In the first quarter, ex U.S. SPINRAZA revenue benefited from a one-time VAT refund and the timing of shipments in certain markets, which together was a benefit of approximately $26 million versus Q1 of 2024.

And as I mentioned earlier, our four launch products together delivered $200 million of revenue to Biogen in the first quarter, an increase of 22% quarter-over-quarter and more than doubling year-over-year. We continue to see steady sequential growth of LEQEMBI with first quarter global end market sales booked by Eisai of approximately $96 million, up approximately 11% sequentially from the fourth quarter of 2024. Global SKYCLARYS revenue was $124 million, a sequential increase of 21% versus the fourth quarter of 2024, driven by continued geographic expansion outside the U.S. Revenue for SKYCLARYS in the U.S. was $69 million, impacted by expected Medicare discount dynamics, partially offset by demand growth. And both ZURZUVAE and QALSODY continued to grow sequentially, driven by increases in demand for each product.

The increase in corporate partner revenue in the first quarter was driven by the timing of certain batch commitments related to our contract manufacturing business, some of which was associated with batches of LEQEMBI. We continue to believe that corporate partner revenue will be roughly consistent when comparing full year 2025 with full year 2024. Due to planned maintenance activities and the timing of batch releases, we expect minimal corporate partner revenue in Q4. I’ll now turn to a few comments regarding expenses. First quarter non-GAAP cost of sales was impacted by increased lower margin contract manufacturing revenue. Non-GAAP core operating expense or R&D plus SG&A expense decreased 1% year-over-year as benefits from our R&D prioritization and Fit for Growth initiatives allowed us to absorb incremental spend associated with our advancing and expanding development pipeline as well as our product launches.

Non-GAAP operating income included approximately $201 million of acquired in-process R&D charges, including the $165 million upfront payment made in connection with the Stoke transaction, which had an approximately $0.95 impact to EPS. Excluding the $165 million upfront payment, non-GAAP operating income would have been $748 million, up 7% year-over-year. As a reminder, we and our peers are required to present upfront and milestone charges in GAAP and non-GAAP operating results. Commencing this quarter, we will break out acquired in-process R&D, including upfronts and milestones in a separate line item in our P&L, consistent with many of our peers. We believe this provides better transparency about our core R&D activities and business development activities.

We plan to disclose the schedule of expected charges for each quarter ahead of our earnings calls to aid in modeling. Now, I’d like to provide a brief update on our balance sheet. We generated $222 million of free cash flow in the first quarter, which takes into account the aforementioned $165 million upfront payment to Stoke. We ended the quarter with $2.6 billion of cash and approximately $3.7 billion of net debt, and believe that our balance sheet remains strong, allowing us to continue to invest in both internal and external growth opportunities. Turning now to guidance, where we are pleased that our expected underlying business outlook for the year has not materially changed. We are updating our full year EPS guidance to reflect the approximately $0.95 impact from the Stoke transaction, along with $0.20 of an earnings tailwind from foreign exchange impacts from a weaker U.S. dollar.

We now expect our full year 2025 non-GAAP diluted earnings per share to be between $14.50 and $15.50. We continue to expect total revenue for 2025 to decline by a mid-single-digit percentage, driven primarily by an increased decline in our MS business. We expect that our launch products will generate sequential revenue growth, but we expect the absolute MS revenue decline to be steeper than this growth in 2025. As a reminder, we expect a potential biosimilar entry for TYSABRI in the U.S., which we believe could occur sometime in the fourth quarter of this year. And as I mentioned a few minutes ago, we have started to see generics for TECFIDERA entering Europe, and while we will continue to vigorously defend our IP, we do expect to see further impacts from generics in Europe this year.

As I noted earlier, we believe that corporate partner revenue will be roughly consistent when comparing full year 2025 with full year 2024. Due to planned maintenance activities and the timing of batch releases, we expect minimal corporate partner revenue in Q4. We believe we are on track to deliver the $1 billion of gross savings and $800 million of net savings under our Fit for Growth initiative. As you can see on the slide, many of our guidance considerations have remained the same as when we guided for the year back in February. I will also refer you to our press release for other important guidance assumptions. And finally, a topic of great interest to many investors is the impact to our business from tariffs. Biogen currently does not expect a material impact in 2025 from potential tariffs as announced by the administration — U.S. administration on April 2, 2025, even if the exemption for pharmaceuticals were to be removed.

This is based on both a significant portion of U.S. revenue being derived from products, which have manufacturing operations in the United States, as well as our current global inventory position. Our guidance range also considers potential retaliatory tariffs from China as announced. However, the U.S. and international tariff landscape remains uncertain and our guidance does not contemplate any new tariffs that may be announced in the future. I will also note that when excluding one-time tax impacts, our tax rate is broadly a function of our business mix and, therefore, does not serve as a good proxy for estimating potential tariff impacts. Biogen’s effective tax rate is a reflection of our U.S. market revenues being almost entirely taxable in the U.S. at the full federal plus state tax rates.

We also generate a relatively high percentage of our revenue outside the U.S., which is taxable in those markets and in the U.S. under the GILTI regime. We will continue to monitor and analyze the current and future U.S. and reciprocal tariff landscape as it evolves. I’ll now pass the call over to Chris for some closing comments.

Chris Viehbacher: Thank you, Robin. Again, if I come back to where is Biogen going, you just have to look at our pipeline. We’ve got another four Phase 3 starts that’s after the Phase 3 start already in AMR. We’ve got three clinical trial readouts coming. We’ve got three regulatory decisions coming. One of the other things I’ll say is, in this first quarter, as we did a major restructuring of research, and I’m really quite excited about what we’re doing there, as an industry, we rely way too much on late-stage business development. The most cost-effective place to do collaborations is actually pre-clinically and we have a goal of signing four to five new research collaborations this year. Just on research, Biogen has been known for breakthrough medicines.

In fact, all four products that we launched in 2023 and ’24 are first-in-class, first-ever disease-modifying agents. And we go after some of the hardest-to-treat diseases. But one of the problems about being breakthrough is that you’re in diseases where a lot of the investment committee is not already doing an awful lot of research. If I take AMR, the antibody mediated rejection, for example, there’s really no treatment there today. And so, one of the things that I think we feel that we would like to do is do a deeper dive into some of these diseases and pipeline assets, not with the intention of presenting new data, but to just say, okay, what’s the competitive landscape? What’s Biogen’s right to win here? What’s the patient journey? What is it going to really take to move the needle on one of these diseases?

What’s the reimbursement landscape going to be like? What’s the epidemiology? If I look at AMR, for example, I think this is a huge opportunity for Biogen. And we saw 80% resolution of AMR in Phase 2 trials. So, we have a high level of confidence in that. But of course, a lot of people are interested in IgAN. What’s it going to take to really be interested in IgAN? And I spent an entire day with our West Coast Hub, just on felzartamab. And there’s a huge amount of things going on there. And even things like all CD38s are not created equally. So, what do they like? So, we would like to invite whoever is interested to come to some of these thematic seminars. The first one we’re going to hold on June 11, and hopefully that’ll be the first of the series.

And it’s just meant to be educational and a deeper dive and we’ll have some of our top internal experts here on all of these subjects to answer any and all questions. So, with that, Tim, I’ll turn it back to you for Q&A.

Tim Power: Thanks, Chris. Melinda, can we go to our first question, please?

Operator: Certainly. [Operator Instructions] And your first question comes from Brian Abrahams with RBC Capital Markets. Please go ahead.

Brian Abrahams: Hey, good morning, and thanks for taking my question. Congrats on the recent LEQEMBI approval in Europe. Can you talk about what the rollout strategy could look like there and your sense of what the reimbursement process and amenability could be? Thanks.

Chris Viehbacher: Yeah. Thanks, Brian. Well, that is certainly going to take some time. The fact that the approval took a while tells you that there’s an awful lot of thought going into that. One of the things about when you first — when you launch a first-in-class disease-modifying agent is that you’re not displacing anything in a budget. So, these types of products are incremental adds to the total healthcare budget of countries. And so, that’s sometimes where it’s easier to launch a product that’s kind of a me-too that comes in and can simply cannibalize the budget of another product. So, this is obviously a significant market in Europe. The Europe is an aging continent, even more so than the United States. So, there are an awful lot of eligible patients.

But we’ll be taking that with our partners Eisai market by market. I do think that also LEQEMBI has run the gauntlet. I mean, there has been a full examination of the efficacy, the safety, but also the economic benefit. As you know, the EMA does take into account some aspects of the economic impact. So, I think that in some ways, this deep interrogation by all of the countries of the European Union, by the way, I think should actually, if anything help us as we go into reimbursement, because this has been fully examined and fully evaluated, but I think it’ll be — it’ll still take some time and we’ll go to — some of the countries will launch clearly faster as is the case generally in Europe.

Tim Power: Thanks, Chris. Let’s go to the next question, please.

Operator: We go next to Evan Seigerman with BMO Capital Markets.

Evan Seigerman: Hi, all. Thank you so much for taking my question. I want to touch again on LEQEMBI, but this time with the subcutaneous formulation. Maybe remind us how that potential for at-home administration can help accelerate sales in the United States? I mean, we’re seeing some good uptake, but I think that that could really help get things going further. And maybe some of the hurdles that you have to overcome to really get full penetration there? Thank you.

Chris Viehbacher: All right. So, the first is subcutaneous for maintenance. And these are patients who have been going — undergoing bi-weekly infusions now for 18 months. And so, there — I think there are two aspects for the commercial. First is, we are busy focusing on making sure that physicians and patients understand the need to continue on therapy. And there, we have long-term extension data and we’ve demonstrated that in 36 months after treatment, patients are still doing better on treatment than if they stop treatment. So, there’s the whole establishment of the maintenance market. But if — these are also older patients and it’s not always easy to get to infusion centers. Obviously, we make it easier with once monthly dosing, but our view is that this is going to be more effective as a long-term chronic therapy if you have a patient-friendly administration like subcutaneous.

So, I think as a first step, the subcutaneous really helps establish and extends the treatment life of a patient in maintenance. And then, of course, in the initiation phase, that will be interesting to see. I think in major urban centers, I think we may see that some physicians may want to continue at least in the first few months of therapy on infusion, because they’re timed with the MRIs to monitor ARIA, and then move to subcutaneous. I can imagine in more rural settings where getting to infusion centers is not as easy for patients that the subcutaneous might even be right from the get go. So, I think it will depend a little bit on where you are as a patient, but there’s no question that this is again a simplification of the physician’s workload.

It’s a heavy load to think about the PET scans or the lumbar punctures, going to negotiate for use of the infusion beds, which are often considered to be the domain of the oncologist. And just from a caregiver point of view of bringing the patient to the infusion center, I think this will be welcomed by them as well that they can do this at-home. So, I think this is an enabler for the patient, but also for the physician.

Tim Power: Melinda, can we go to the next question, please?

Operator: We go to Salveen Richter with Goldman Sachs.

Salveen Richter: Thank you. Good morning. Just following up on Evan’s question here, could you just speak to your thoughts on LEQEMBI uptake and growth on the [forward] (ph), not only with subcutaneous maintenance dosing in the second half, but also with Fujirebio’s in vitro diagnostic, which should enter the market as well? Thank you.

Chris Viehbacher: Yeah, we don’t have that much information about the diagnostic. The process to get a diagnostic approved is different obviously than a drug. And then, the reimbursement situation is also different. I do think the recent report by the Alzheimer’s Association highlighted the need for early diagnosis. One of the issues that has, as I think, been in Alzheimer’s is that patients — most patients are actually seeing their primary care physician, and it can take quite a long time for the physician to distinguish, is this just part of the normal aging process, is this some other form of dementia, or is this Alzheimer’s? And so, two or three years can go by, and sometimes even longer before the Alzheimer’s diagnostic is done through a referral to a neurologist.

Now, one of the things that that Alzheimer’s report also pointed out is that there’s a real interest in getting treatment earlier. And that the earlier you can get to a patient before there has been too much neuronal damage or death, the better. And so, I think there is a real effort to be done to really get those diagnostics established. And so, the benefit really is I think two-fold. One is, hopefully, we can get patients on treatment at a much earlier stage of their disease and we believe and there’s obviously studies ongoing to actually gain the evidence of that. But even the data that we presented at CTAD in 2023 of low tau patients, which is surrogate for early-stage patients, demonstrated that 60% of patients were stable after six months and actually 70% — sorry, 70% were stable after six months and 60% actually showed some level of improvement.

So, I think the blood-based diagnostics are going to be extremely important, but again, we have to wait and see where those companies are in the regulatory process.

Tim Power: Can we go to the next question, please?

Operator: Your next question comes from Tim Anderson with Bank of America.

Tim Anderson: Thank you. On LEQEMBI, how are you seeing the market parse out between your product and Lilly’s Kisunla? Because obviously there’s a very big difference in terms of commercial positioning around finite dosing. And I’m wondering who’s going to kind of win that battle. And Chris, you answered an earlier question starting off talking about getting docs to keep patients on therapy. So, the product — your product still in the market now for coming up on two-and-a-half year. Are you actually seeing some prescribers take patients off therapy after a period under the idea that once plaque is gone, you no longer need to give drug?

Chris Viehbacher: Yeah. I mean, I think first, I would say, we would really consider the launch of this product to have been September of ’23, because that’s when we had full approval. We had reimbursement from CMS. In actual fact, we didn’t even really get the question on the reimbursement for PET scans clarified till about November of that year. So, I think we’re still much earlier in that launch phase. To your question on this versus donanemab, it depends on the physician. And I think we’re going to see those who like this idea of potentially saying, well, there’s a finite point to this, equally, what we have seen even at the recent AD/PD, once you have a maintenance indication and you start to see the data, you’d start to realize that, well, actually once you’ve removed the plaque, you’re not done, because there is some return of the plaque and potential damage.

So, there will be obviously a lot of education to be done to demonstrate the importance of continuing on that. But I think at the end of the day, it’s largely going to be up to the physician and the patient. There will be patients where donanemab may be the right answer for them, depends on their fragility, their age, whether they’re in a rural setting or an urban setting. And I think the market ultimately just gets split between us and donanemab. The most important thing for both Lilly, I think, and Biogen and Eisai is that we start to really expand this market. We’ve got maybe, I don’t know, 12,000 to 13,000 patients somewhere in there on treatment, less for donanemab, but they will get there. But when you consider the number of patients who desperately need treatment, we’re still only treating a small fraction.

And I think that’s really got to be the focus of all the companies in this space is to really ensure that more patients benefit from these disease-modifying treatments.

Tim Power: Can we go to the next question, please, Melinda?

Operator: Next up is Chris Schott with JPMorgan.

Chris Schott: Great. Thanks so much for the question. I just would love a bit more elaboration on latest thoughts on business development in terms of the size and scopes of deals you’re considering. It’s obviously been a pretty volatile market out there. And I’m just wondering if that’s changing your views at all or the range of opportunities that might be available to Biogen. Thank you.

Chris Viehbacher: Yeah. Thanks for that question. I mean, I think there is — there has been a shift even perhaps in the last, I would say, four to six weeks in a couple of ways. I mean, valuation is one thing, but you’re still really focused on getting the right thing. And what I think has changed is, you have a lot of healthcare investors who are facing a lot of pressure from LPs and I think they are looking for liquidity. And I think we’ve had a lot of companies who not really wanted to do much because valuations are low, but we’re also finding that there’s a lot of companies who are struggling to get financing. So, I think if you’re looking to acquire, I think there might be a little bit more of an ease in actually getting at least into a discussion.

But I think even from a collaboration point of view, I think one of the things we’re going to see and I think this is also where we’re doing this in the early research collaborations, I think companies will be able to provide some of the funding as some of the venture capital and some of the other sources of funding dry up for other companies. And so, there are opportunities in there. It still requires an awful lot of patience and discipline to work your way through and find companies that work together. I do think Biogen is actually well-positioned. One of the things I’m particularly proud of is, we have this West Coast Hub, which is essentially the HI-Bio team and we have been able to retain virtually everybody in that HI-Bio team. Jane has hired our Head of Immunology, came from BMS, who’s out there on the West Coast and we’re building out that team.

And so, I think Biogen, just because of our own biotech roots, is a company that knows how to do collaborations and I think can be a trusted partner in this. So, I do think this is an opportunity, but again — and we look at a lot of things, but even in this environment, you still have to stay disciplined.

Tim Power: Thanks, Chris. Could we go to the next question, please?

Operator: We’ll go to Michael Yee with Jefferies.

Michael Yee: Thanks. Good morning. I wanted to ask Priya about the early AHEAD 3-45 study. I know that you’ve guided to a 2028 readout. Your competitor is also guiding to a readout, although I think there’s an assumption that they may come earlier. Can you just talk about maybe one or two points about your positioning versus that study and particularly what would get you extremely confident that that’s going to work and/or readout? Because I know that you have an interim, but I’m just going to assume you’re not going to take that interim. Thank you.

Priya Singhal: Yes. Thanks, Mike. So, overall, I would say, I’d like to start by saying that with Clarity AD, we established that LEQEMBI clears plaque and that translates to clinical benefit. Now, with regards to the presymptomatic Alzheimer’s disease area, it’s a big spectrum. And we believe that AHEAD 3-45 is truly positioned to provide a comprehensive understanding and evaluation of how LEQEMBI can preserve cognition across the full spectrum of presymptomatic AD. And the reason for that is that we are testing it in two parallel trials. The first one is AHEAD 3, which is about 400 subjects and really by the inclusion criteria are 20 to 40 centiloids of amyloid. And then, the other trial is greater than 40 centiloids, which is the AHEAD 45 amyloid levels.

And there we’re looking at whether it can prevent cognitive decline. So AHEAD 3 is looking at can we stop the accumulation of amyloid, has amyloid PET as the primary endpoint and then AHEAD 45 is looking at preventing cognitive decline and we have a very sensitive clinical by endpoint called the PAC-5 along with amyloid and tau PET. I think, in contrast, TRAILBLAZER-ALZ 3 is really evaluating whether donanemab can slow clinical progression in a mixed population. And this is based on their baseline CDR global scores. So, it presymptomatic is about 55% and they have included 45% of symptomatic patients. So, these studies are actually quite different and we are looking at the entire range of presymptomatic patients with varying degrees of amyloid.

We will — we do expect we fully enroll, we do expect to readout in 2028. We always reserve the optionality of looking at data earlier or such or not commenting on that right now. We are looking at a readout in 2028.

Chris Viehbacher: And I think if I could just from a commercial point of view, I do think the AHEAD study will actually answer much more of the question that physicians will be looking to ask. I mean, if you’re in presymptomatic patients, these are otherwise healthy people, right? And the risk benefit equation becomes different at that point. And there is ARIA that is associated with both products. So, you’re going to have to answer the question about the risk benefit of treating earlier and at what level of amyloid burden. And I think that’s going to be useful because the blood-based diagnostics will tell you that if there is a presence of amyloid, they will not tell you about how much. So, at some point — you’re sort of, say, 55, you had a positive blood test, someone’s going to send you for a PET scan to see how much amyloid you have.

And let’s say you’re at 50, well, are you in a watch-and-wait mode or do you actually treat? And unless you’ve actually done the study of looking at the full spectrum of amyloid burden, I’m not sure that physicians are going to feel comfortable about treating. So, I do think actually AHEAD 3 and 45 are going to be really landmark studies in Alzheimer’s.

Tim Power: Can we go to the next question, please, Melinda?

Operator: We’ll go next to Umer Raffat with Evercore ISI.

Mike DiFiore: Hi, this is Mike DiFiore on for Umer. Thanks so much for taking our question. Again, one on LEQEMBI. Lilly’s drug did about $20 million — $21 million of sales in Q1, which is its second full quarter of launch. And this tracks slightly ahead of LEQEMBI sales at the same time point. So, my question is, has Biogen and Eisai perhaps paved the way for Lilly in terms of opening up healthcare infrastructure? And maybe perhaps could you speak to any competitive dynamics at play now that you’re roughly 18 months into launch? Thank you.

Chris Viehbacher: I think the answer is probably yes. Clearly, there’s been a lot of hard work, particularly the IDNs to work through all the treatment pathways and protocols and treatment regimens that are needed. And so, then — now we’re into a question of lecanemab versus donanemab in those questions. And as I said earlier, I think there will be cases where physicians are looking at both products. I think it’ll be a question of who gets initiated. I don’t think we’re seeing any switching going on here. So, it’s really a question of which one are you going to start on and then stay on. I think the bigger question is, can we actually collectively grow the market? And that’s really what’s most important. And I don’t think we particularly want to get into just trying to duke it out over market share in a relatively still small market.

There are a lot of patients out there and we are not yet doing a full service to patients who are suffering. And so, the more that we can get more centers up and running and better education, the better it will be for patients and actually for both companies.

Tim Power: Thanks, Chris. Let’s go to the next one, please.

Operator: Next up is Terence Flynn with Morgan Stanley.

Terence Flynn: Great. Thanks so much for taking the questions. Obviously, there’s been a lot of focus on the FDA under the new administration. And I know you made some comments about your Dravet program moving into a Phase 3. So, just wondering, if you could comment high level, number one, on your interactions with FDA, and if there have been any changes to the review teams, things like that. But then, also, in some of these rare diseases, do you think this FDA is going to be advancing very rapidly and be more favorable to the industry in terms of thinking about maybe surrogate endpoints? Thank you.

Priya Singhal: Yes. Thank you. Overall I’ll just make a high-level statement, that based on our interactions on review meetings and requests, we’re not really seeing any changes at a high level. Currently, we remain on track with our engagements. And with regards to Dravet syndrome, I think that — obviously the data that we saw during diligence and which I spoke to as well today, for us that has been very compelling. That has been it has several aspects to it. First of all, this population, although it was a small open-label trial, I think what was important about it was that these patients were on standard of care. And unfortunately, the burden of disease is high in Dravet’s and they have a number of seizures sometimes seven to 10 a week and they are on multiple medications, anti-seizure medications.

And in fact, we saw the impact of zorevunersen on top of standard of care. So, the impact that we saw was 87% seizure reduction on top of background standard of care — full standard of care. And then that was durable out to about 76% when you look out six months. So that — the data was important. But the other aspect to the question that you asked is that, Stoke had already engaged with FDA, Europe and Japan. So, we have regulator input, which we have evaluated carefully. We have agreement on the approach and design to the Phase 3 EMPEROR’s trial. So, we remain fairly confident that this is the right trial to conduct. And so, we remain encouraged about where we are in our engagement, not only with the FDA, but global regulators and that the design is appropriate to really give us that answer on what we hope will be a disease-modifying therapy impact on — in this population.

Chris Viehbacher: But I think to your broader question, I think certainly right now at Biogen, we have not really seen any delays in our interactions with the FDA. And I personally am encouraged by some of the more recent comments by the new commissioner about particular ultra rare and thinking about surrogate markers and making sure patients get drugs earlier. And I think he seems to be more interested in innovating some of the process. I think about his statements on reducing the use of animals in studies, for example, and use of AI. So, there’s certainly a lot of change going on at the FDA and we’re watching very carefully. And obviously, it’s been some key leaders who have left and some reduction of staff. But let’s say so far, at least from a Biogen point of view, we haven’t seen any adverse effect to that. And perhaps some of the new perspectives of the new Commissioner Makary could actually be helpful to us.

Tim Power: I know it’s a busy morning, so maybe we can squeeze one last question in here. Melinda, our last question, please?

Operator: We go next to Geoff Meacham with Citibank.

Geoff Meacham: Great. Good morning, everyone. Thanks for the question. For Chris or Robin, on manufacturing, Biogen has historically had a lot of capacity in the U.S. going back to the original expectations in Alzheimer’s. I guess, the question is, as we see more companies in biopharma announced plans to onshore capacity, do you guys view your own capacity or resources differently? I wonder if there’s a short-term opportunity to partner that’s not in the model, obviously, all of course depends on what you have in excess. Thank you.

Chris Viehbacher: Yeah. We’ve actually recently — our main facility in Solothurn, for example, we’ve recently, — there, we’re actually doing CDMO business to absorb capacity. Obviously, that doesn’t help for someone looking in the U.S. In RTP, we actually do quite a lot of manufacturing already for third-party companies. And I think even before I joined Biogen, I knew of the reputation of our RTP facility. It’s a very high-quality, very efficient site. So, yes, I think we certainly will be open and looking for opportunities on that front.

Robin Kramer: Yeah, we have a good mix in both facilities between our own product manufacturing as well as those for partners.

Tim Power: Well, thanks for your time everybody. Really appreciate it. And if you’ve got more questions later today, just reach out to the IR team. Thank you.

Operator: This concludes today’s conference. We thank you for your participation. You may disconnect at this time.