Biogen Inc.

Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen second quarter 2020 financial results and business update. All lines have been placed on mute to prevent any background noise. After the speaker's remark, 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 Marra, Vice President, Investor Relations. You may begin your conference.

Good morning, and welcome to Biogen's second quarter 2020 earnings call. Before we begin, I encourage everyone to go to the Investors section of Biogen.com, to find the earnings relief in related financial tables, including a reconciliation of the GAAP and non-GAAP 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 and non-GAAP financial results and our GAAP and non-GAAP financial guidance. 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 discussions related 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 details. On today's call, I am joined by our Chief Executive Officer, Michelle Bonatos, Dr. Al Sandrock, EVP Research and Development, and our CFO, Jeff Capello. Now, I will turn the call over to Michelle.

Good morning, everyone, and thank you for joining us. With a focus on strong execution, we have continued to serve patients, advance our strategic priorities, and delivered another strong financial quarter. Let me begin with some important developments. First, we have completed our submission for U.S. approval of aducanumab, an unprecedented opportunity for patients and for biogen, to potentially bring to market the first therapy to reduce the devastating clinical decline and meaningfully change the course of Alzheimer's disease. I am incredibly proud of the BioGen team for their dedication and tireless work leading to the completion of our regulatory submission on July 7. This submission follows ongoing collaboration with the FDA and includes data from a comprehensive clinical development program including EMERGE, the first positive phase three study ever in this phase, together with supporting data from the phase three ENGAGE study and positive results from the phase one B-prime study. Our data show that aducanumab may help to both reduce the decline of cognitive function and help patients' ability to perform certain activities of daily living, which for some patients may result in independence for a longer period of time. In terms of next steps, we anticipate receiving a response from the FDA within 60 days from the submission date, notifying us if the submission has been accepted, and if accepted, whether we have been granted priority review. We plan to communicate both of these decisions via a press release. We have progressed in our U.S. launch readiness, including increasing our medical engagement with experts and thought leaders to better assess how aducanumab could potentially impact clinical practice. We have started to make progress engaging with payers and defining aducanumab's value proposition, and we have now established a cross-functional team dedicated to site readiness, which is currently operational. Outside the U.S., we made significant progress this quarter. We had formal meetings with the EU regulators as we prepared to submit a filing, and we are beginning to ramp up our launch readiness efforts in Europe. In Japan, we had informal regulatory interaction and are preparing for formal consultation with the PMDA. Overall, together with our collaboration partner, SI, we remain optimistic about the prospect of bringing aducanumab to market as the first therapy to meaningfully change the course of Alzheimer's disease, and we have continued to progress in our market preparation and long-treadiness with an initial focus on the U.S. We believe that aducanumab marks the beginning of an era of new potential treatment for Alzheimer's disease, and we aim to build a broad franchise across multiple targets and modalities. This includes band 24-1 in phase 3, which we are collaborating on with SI, including a new study in preclinical Alzheimer's, multiple programs targeting tau, and our collaboration with Sangamo to develop gene regulation therapies for a range of neurological indications, including Alzheimer's disease. We believe Biogen is uniquely positioned to lead the fight in Alzheimer's disease over both the short and the long term. Second, we are disappointed in the recent court decision in West Virginia regarding our patent for TechFedera. We are appealing the decision and intend to vigorously defend our IP. No matter what the final outcome will be, we still believe Biogen is well positioned for shareholder value creation as we work to capitalize on growth opportunities in our core business and uniquely positioned, and that the time is now for Biogen to lead in the evolution of this space. We have a deep pipeline of 29 clinical assets, including seven in phase three are filed. And seven, meet to late-stage data readouts by the end of 2021 with near-term value creation opportunities beyond Alzheimer's disease in other important areas such as ALS, ophthalmology, lupus, and stroke. Third, as we announced yesterday, Jeff will be stepping down as CFO in August. I'd like to thank Jeff for his many contributions to the company including establishing a very strong team, helping to deliver consistent results quarter over quarter, strengthening our finance processes and operations, and creating a disciplined cost management culture. We are pleased that Jeff will be staying on for a brief period to ensure a seamless transition. We wish him well in his future endeavor. I will now review our Q2 performance and progress against our strategy priorities. Compared to the same period a year ago, second quarter revenues grew 2% to $3.7 billion. Second quarter GAAP earnings per share grew 22% to $9.59, and non-GAAP EPS grew 12% to $10.28. Importantly, We saw improved momentum in June following an impact from COVID-19 earlier in the quarter. First, Q2 MS revenues including OCRVS royalties were $2.3 billion. The number of patients on our MS product globally increased 3% versus the prior year, and our business continues to demonstrate resilience. We saw strong market share performance for our MS portfolio this quarter with increased share of new prescriptions in the US and stabilized market share in Europe. Overall, our Fumared products had a strong quarter as we focused on maximizing the potential for Tecfidera and Vumerity combined. Although we were disappointed in the performance for Vumerity, it's important to note that the MS market in the US has been significantly impacted by lower new patient staff and switches due to COVID-19, as well as reduced engagement with physicians, which have both impacted the launch of Vimerity. Importantly, we believe the market is increasingly aware that Vimerity is clearly differentiated in terms of better GI tolerability and may represent a better treatment alternative for many MS patients. Going forward, Our strategic focus is now on Vumerity, and we are increasing our resource allocation to maximize this next-generation FEMA rate. We are hopeful that this approach, combined with a potential recovery in the dynamic portion of the market, will help improve Vumerity's trajectory in the second half of the year. Outside of the U.S., this quarter, We were very pleased to have submitted regulatory filing for the emergency in Canada and Switzerland, and we plan to file in the EU by the end of this year. A critical part of our strategy in MS is and will continue to be investing in lifecycle management and innovative new approaches to help address the remaining unmet medical needs. We look forward to the readout of OPC-NUMAB this year, which could represent a transformative new approach to slowing or even potentially reversing disability progression through remuneration. In addition to OPC-NUMAB, we continue to advance BIP61, an oral remuneration therapy, and BIP91, an oral BTK inhibitor with a potentially best-in-class profile. And we believe these important assets could bolster our broad portfolio of treatments for MS going forward. Across our current MS products, our focus on lifecycle management is a high priority. We recently filed for approval of a subcutaneous formulation of both the US and EU to offer a competitive dosing profile in the high-efficacy space. We continue to advance the potential use of extended interval dosing for Tysabri. We are advancing an intramuscular formulation of Plegrity to potentially improve its tolerability profile, and we are leveraging label updates regarding the use of interferons during pregnancy. We remain committed to MS, and regardless of the outcome of the tech federal litigation, we are focused on maximizing the broad opportunities we have with both present and future product offerings. Second, Spinraza. Spinraza generated second quarter global revenues of $495 million, a 1% increase versus the prior year. We are pleased with its performance in light of dozing delays due to COVID-19, which peaked in mid-April and began to normalize in May and June. Including the expanded access program and clinical trials, over 11,000 patients are being treated with Spinraza, an increase of 30% versus the prior year. This quarter, we presented important new data at the virtual CURE SMA meeting, showing an unprecedented benefit on survival for pre-symptomatic SMA patients treated with Spinraza. Data from the neutral study continue to demonstrate the compelling benefits Spinraza can provide to patients. This follows the publication of independent real-world data earlier this year demonstrating the clinically meaningful benefits Spinraza can deliver for teens and adults, which represent the largest portion of the market. Spinraza continues to be the only therapy approved for SMA patients of all ages. with clinically meaningful and sustained efficacy across all age groups. We recently announced our plans to initiate a new clinical study evaluating the safety and efficacy of Spinraza when administered to infants following gene therapy. We believe there is a strong scientific rationale and a high need to evaluate the potential added benefit of Spinraza in this population. We have seen real-world demand for Spinraza in this setting with 40% of patients in the long-term extension of the phase one study of gene therapy going on to receive Spinraza. Further, in our lifecycle management in SMA, we are also investigating whether higher dose of Spinraza could result in even greater efficacy through the devote study. Third, biosimilar revenues for the second quarter were $172 million as we observed an impact from COVID-19, particularly early in the quarter. We estimate that our biosimilar 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 important as we work to create financial headroom for innovation and contribute to the long-term sustainability of the healthcare systems. In addition, Samsung BioAPIS recently initiated a phase three study for our potential biosimilar referencing ILEA, as we work to expand into ophthalmology and additional geographies, including Japan and the US. Fourth, beyond Alzheimer's disease, We continue to progress our pipeline. We initiated a new Phase I study in movement disorders. We presented positive first-in-class data for BIP59 in cutaneous lupus erythematosus, and the positive Phase I-II results for Tofersen in SOD1 ALS were published in the New England Journal of Medicine. Fifth, our cash flow generation remains strong. and continue to provide us with significant optionality and flexibility to allocate capital. In Q2, we generated approximately $2 billion in cash flow from operations. We have $5.3 billion in cash and marketable securities on the balance sheet, providing us with the financial flexibility to continue to evaluate external business development and M&A opportunities. As we have demonstrated in the past, we are committed to maximizing returns for our shareholders as we aim 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, Biogen has continued to execute well on our strategy, including the recent BLA submission for aducanumab in the U.S. While we are mindful of the potential risk to Tecfidera, We believe we are well positioned as we continue to build a multi-franchise portfolio, leveraging the interconnectivity of our deep neuroscience pipeline. We expect seven important meet-to-late-stage readouts by end of next year, and we have several opportunities for meaningful value creation in areas of high unmet medical need beyond Alzheimer's, including ALS, ophthalmology, lupus, and stroke. as well as continued innovation in MS and SMA. I will now turn the call over to Al for a more detailed update on our recent progress in R&D.