Biogen Inc.

Good morning. My name is Lisa, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Biogen first quarter 2020 financial results and business update. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. Please limit yourself to one question to allow other participants time for questions. If you require any further follow-up, you may press star 1 again to rejoin the queue. Thank you. I would now like to turn the conference over to Mr. Joe Mara, Vice President, Investor Relations. You may begin your conference.

Good morning, and welcome to Biogen's first quarter 2020 earnings call. Before we begin, I encourage everyone to go to the Investors section of Biogen.com to find the earnings release and related financial tips, including a reconciliation of the gap to non-gap financial measures that we will discuss today. Our GAAP financials are provided in Tables 1 and 2, and Table 3 includes a reconciliation of our GAAP to non-GAAP financial results. We believe non-GAAP financial results better represent the ongoing economics of our business and reflect how we manage the business internally. We've also posted slides on our website that follow the discussion related to this call. I would like to point out that we will be making forward-looking statements which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. On today's call, I'm joined by our Chief Executive Officer, Michel Venazos, Dr. Al Sandrock, EVP Research and Development, and our CFO, Jeff Capello. Now, I will turn the call over to Michel.

Good morning, everyone, and thank you for joining us. I want first to acknowledge the challenging situation the global COVID-19 pandemic has created for so many people. Our hearts go out to everyone who has been impacted. We applaud the way our employees and everyone across the entire healthcare system is breaking down barriers and working together to address this pandemic. And we are committed to doing our part to support communities worldwide. At the same time, we are also committed to learning from the current situation and working to develop innovative new operating models such as accelerating our digital capabilities, which we believe will better position Biogen for the future. During these challenging and unprecedented times, Biogen's mission and purpose remain the same. Over half a million patients around the world rely on us today to supply important medicines for serious diseases. And there still remains an urgent need to develop innovative therapies for the millions of patients suffering from devastating diseases of the nervous system. Let me now provide you with an update on how we are operating our business throughout the pandemic. First, I would like to recognize the resilience and adaptability of the Biogen team. Biogen personally felt the painful impact of this global crisis as many of our employees became sick early on and others have since been affected. We have been fortunate that, as of today, all of our employees have recovered or are recovering. Most of our affected employees have continued to work and fulfill their duties. We are grateful to the public health authorities for all they have done, and we are also thankful for the courage and compassion of the healthcare workers who have been helping us and continue to support so many. We took a number of actions early on to support our stakeholders and society at large, including committing $10 million from the Biogen Foundation to support global response efforts, launching a consortium with the Broad Institute of MIT Harvard and Partners Healthcare to build and share a biobank and giving Biogen employees who have recovered as well as their close contacts the opportunity to donate samples and medical data. Pursuing a process development and manufacturing collaboration with Vier Biotech, which is developing potential antibody therapies for COVID-19. Providing medical equipment and supplies to Partners Healthcare in Massachusetts and developing and donating 3D printed personal protective equipment in Massachusetts and North Carolina. Engaging with investigators who may want to evaluate the potential of our interferon therapies or our anti-TNF biosimilars to treat COVID-19. Facilitating volunteers' efforts by our medically trained employees to serve as healthcare workers on the front lines and by other employees to serve the community. And implementing policies and practices to safeguard our employees and communities including asking almost all the employees to work from home at this stage. These are our initial commitments, and we will continue to look for additional ways to help. At the same time, we have remained intensely focused on operating our business to serve the needs of all our patients and stakeholders. I am proud to see the Biogen team demonstrate agility by quickly defining innovative approaches to both mitigate risks and identify new opportunities across R&D, manufacturing, medical, and commercial operations. Let me provide you with an update on several key areas of our business. At this time, our supply chain around the world is functioning well. We continue to operate our manufacturing facilities and are working with organizations across our supply chain to maintain continuity, and we continue to closely monitor the evolving situation. We are carefully considering recent regulatory guidance on conducting clinical trials during the pandemic, and the safety of participants in our clinical programs is our top priority. To help mitigate the impact to our clinical trials, we are pursuing innovative approaches such as remote monitoring, remote patient visits, and supporting home infusions. While we expect there may be some impact to timelines for some of our clinical programs, importantly, we still expect the vast majority of the 10 remaining readouts we have recently highlighted to occur before the end of 2021. We have continued to have frequent interactions with regulatory authorities, including for aducanumab. We have adjusted our commercial and medical affairs operations and accelerated our digital engagement with customers. We are working with regulators to enable home infusions for Tysabri where appropriate. To date, our business and financials have remained strong. We believe that we are in a strong position to remain the leader in neuroscience based on the strengths in our core business areas, a healthy balance sheet and financial position, and a robust pipeline across several important disease areas. We continue to believe we have multiple opportunities for significant new term value creation as we aim to build a multi-franchise portfolio in areas such as Alzheimer's, ALS, stroke, ophthalmology, and lupus. Now, let me turn the highlights of the first quarter, starting with our financials. First quarter revenues grew 1% to $3.5 billion. First quarter GAAP earnings per share grew 13% to $8.08. And non-GAAP EPS grew 31%. to $9.14. Turning to our progress across our strategic priorities. First, we have made good progress towards the regulatory filing in the US for aducanumab. We have continued to have constructive engagement with the US FDA. We now have an open BLA and we have started to submit modules of the filing We have participated in additional formal interaction using mechanisms such as Type C meetings, and we are preparing for a pre-BLA meeting currently scheduled for the summer. Following that meeting, we expect to complete the filing in Q3. I'd like to thank the FDA and the aducanumab team at Biogen who have adjusted to working under the current circumstances with COVID-19, in particular as some members of the Biogen team were directly impacted. Outside the U.S., we have had initial aducanumab discussions with regulators in Europe and Japan, although these interactions are still in the early stages. In March, the first patient was those in the AMBARC redosing study. which aims to provide access to aducanumab for eligible patients previously enrolled in our aducanumab clinical studies. While we collect important data in this study, we do not believe it is required for the filing. From a manufacturing standpoint, we currently expect to have adequate supply to meet anticipated demand for aducanumab. Initially using our facility in RTP, North Carolina, which will later be complemented by the large next-generation state-of-the-art facility we are building in Solothurn, Switzerland. The construction is complete and its validation remains on track. We expect it to be operating by the end of this year and to be producing some of the commercial supply of aducanumab in mid-2021. Overall, Together with our collaboration partner, SI, we remain optimistic about the prospect of bringing aducanumab to market as the first therapy to reduce clinical decline in Alzheimer's disease. And we continue to progress in our market preparation and launch readiness with an initial focus on the U.S. We hope that aducanumab marks the beginning of an era of new potential treatments for Alzheimer's disease, and we aim to build a broad franchise across multiple targets and modalities. This includes BAN24-1, which we are collaborating on with SI. Multiple programs targeting tau allow our collaboration with CAMP4 to identify new druggable targets Our acquisition of a CK1 inhibitor from Pfizer as a potential symptomatic therapy, and our new collaboration with Sangamo to develop a gene regulation therapies for a range of neurological indication, including Alzheimer's disease. Second, Q1 MS revenues, including Ocrevus royalties, were $2.3 billion, an increase of 9%. versus the prior. The number of patients on our MS products globally increased 3% versus the prior, and our business continued to demonstrate resilience. We continue to launch Vumerity in the US. We have been able to secure unrestricted access for Vumerity faster than other recent competitive launchers. We have also been pleased to see that a large proportion of Vumerity patients have come from therapies older than TechFedera and approximately 30% of Umeriti patients are naive to treatment. We also made progress with our first ex-US regulatory filing of Umeriti in Israel and plans to pursue approval in other major markets worldwide. We were pleased that the claims of our TechFedera patent were upheld by the US Patent Office in a positive decision on the IPR challenge. This decision has been appealed and is pending. We expect decision from the Federal District Courts in the Delaware and West Virginia ANDA actions later this year. Third, SPINRAZA generated first quarter global revenues of $565 million. a 9% increase versus the prior year, and a 4% increase versus the prior quarter. Including the expanded access program and clinical trials, over 10,000 patients are being treated with Spinraza. This quarter, important new data were published showing the clinically meaningful benefits Spinraza can deliver for teens and adults with SMA. And we initiated a new study to evaluate the potential for even greater efficacy with a higher dose of Spinraza. Fourth, first quarter biosimilars revenue was $219 million, which represents 25% growth year over year. We estimate that our biosimilars generated approximately 1.8 billion euros of savings to the European healthcare systems in 2019, which we expect will continue to increase in 2020. This is critical as we work to create financial headroom for innovation and contribute to the long-term sustainability of the healthcare system. Fifth, beyond Alzheimer's disease, we continue to develop and expand our pipeline. In particular, this quarter we submitted regulatory filing for an intramuscular formulation of Plegreti in the US and in Europe, which may be another important option for MS patients. Six, our cash flow generation remains strong and continue to provide us with significant optionality and flexibility to allocate capital. In Q1, we generated approximately $1.5 billion in cash flow from operations. We continue to have the financial flexibility and capacity to evaluate potential external business development and M&A opportunities and remain active on the BD front. As we have demonstrated in the past, we are committed to maximizing returns for our shareholders while continuing to bring innovative therapies to patients, something that demands a thoughtful approach towards all our investment over both the short and the long term. In summary, Despite the challenges due to the COVID-19 pandemic, Biogen has continued to execute well on our strategy. I will now turn the call over to Al for a more detailed update on our recent progress in R&D.