Biogen Inc.

Good morning. My name is Cian and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen second quarter earnings call and financial 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 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. Mike Henke, Director, Investor Relations. Mr. Henke, you may begin your conference.

Good morning, and welcome to Biogen's second quarter 2021 earnings call. Before we begin, I would encourage everyone to go to the Investors section of Biogen.com to find the earnings release and related financial tables, including our GAAP financial measures and a reconciliation of the GAAP to non-GAAP financial measures that we will discuss today. Our GAAP financials are provided in Tables 1 and 2, and Table 4 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 have also posted slides on our website that follow the discussions 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 am joined by our Chief Executive Officer, Michelle Vounatsos, Dr. Al Sandrock, Head of Research and Development, and our CFO, Mike McDonald. We will also be joined for the Q&A portion of our call by Shurfi Guindo, Head of Global Product Strategy and Commercialization, and Alicia Alimo, President of our U.S. organization. As a reminder, during the Q&A portion of the call, we kindly ask that you limit yourself to one question. I will now turn the call over to Michel.

Good morning, everyone, and thank you for joining us. We have completed the first half of a transformative year for Biogen with progress across our neuroscience portfolio. However, I would like to start by addressing the confusion and criticism surrounding the recent approval of Aduhelm. We are cognizant of the key issues raised by the community and are working to provide additional clarity through the following goals. Exploring all options to maximize patient access, including for the underserved population and those more at risk due to ethnicity, educating on the updated label language, which I will discuss, publishing our phase three results in a peer-reviewed journal, and disseminating additional data to inform clinical practice, including the management of ARIA, expediting the execution of the phase four confirmatory study, and leveraging the unique data generation opportunity we have with EMBARC, the longest and most comprehensive longitudinal study for an Alzheimer's disease therapy. Biogen stands behind our clinical data from eight studies with more than 3,000 patients that supported accelerated approval. As the FDA's current chief stated publicly earlier this month, Agihelm was approved appropriately on very solid grounds and represented the right thing to do for the patients. I want to be clear that Biogen stands behind the integrity of the review process. Respectful dialogue between the industry and regulators is standard and essential to advance the understanding of the therapeutic data driving innovation as demonstrated more recently by the COVID-19 vaccines development programs of last year. We believe the accelerated approval pathway has transformed the treatment of oncology and now has the potential to transform the treatment of Alzheimer's disease. We appreciate the concerns about the price and are committed to ensure sustainability of the system and maximizing access for patients. Without access, every day that passes we estimate that approximately 1,000 Americans move from the early stage of Alzheimer's to moderate or severe dementia and therefore may no longer be appropriate for any session of treatment with Aduhelm. This is why we are working with a sense of urgency to engage with the community with payers, with CMS, and with policy makers to discuss potential innovative approaches with the goal of ensuring the price does not represent access issues for patients. With that said, I would like to focus on the fundamentals. Another quarter with solid underlying financial performance that exceeded our expectation. the accelerated approval of Aduhelm for people suffering from Alzheimer's disease and key readouts across our diversified portfolio. First, the accelerated approval of Aduhelm represents the first new therapy for Alzheimer's disease in almost 20 years. Biogen has a deep history of building new markets and delivering innovative and impactful therapies to patients in need. We pioneered and currently maintain the market-leading portfolio of therapies for MS. We delivered the first approved and market-leading therapy for SMA. Now, with Aduhelm, we have the first approved therapy to address a defining pathology of Alzheimer's disease, which we believe represents a significant value creation opportunity for years to come. To lead us in successfully executing on our long-term leadership strategy, I am pleased to announce that Rashid Izzar will be head of our newly created Alzheimer's disease and dementia business unit and will join the executive committee of Biogen. Rashid is currently in charge of Biogen's intercontinental region and our biosimilars business unit. His experience across multiple geographies and global position will serve us well as he works to maximize our potential impact on the lives of people living with this devastating disease. We have seen strong indications of very high initial patient interest in Aduhelm, as well as increased referrals from PCPs to specialists. However, it will take some time for sites to get up and running. While some large centers have said they will reframe for now for administering Adjuhelm to patients, many other sites are moving forward with internal processes such as pharmacy and therapeutics or PNT committee review, with some accelerating faster than we had originally planned. Of the 900 sites approximately which we expected to be ready shortly after approval, We estimate that approximately 325 or 35% have completed a PNT review with a positive outcome or indicated that they won't require a PNT review. We have also seen some sites leverage external infusion centers if they face internal resistance or are awaiting clarity on their facilities internal process. We continue to believe that consistent with our clinical trials, most specialists will require confirmation of amyloid beta pathology either via PET or CSF, which is also taking time to schedule and coordinate. In terms of reimbursement, it is still the early days, and I'm pleased to say that we have seen the first examples of Medicare Advantage plans approving preauthorization. We welcome the recent opening of a national coverage determination analysis by CMS for monoclonal antibodies targeting amyloid beta, including Aduhelm. We believe this process will provide additional clarity on coverage for Medicare beneficiaries and drive consistency of access across the country. We expect that regional Medicare administrative contractors and Medicare Advantage plans will will provide coverage for Aduhelm while the NCD analysis is underway. We believe that CMS's swift decision to initiate the NCD analysis is a testament to the large unmet need in Alzheimer's disease and the urgency to clarify access for patients. We obtained new label language for Aduhelm in July to clarify that treatment should be initiated in patients with mild cognitive impairment due to Alzheimer's disease or mild Alzheimer's dementia. This is the population studied in our clinical trials and where we generated clinical evidence as stated in section 14 of the Aduhelm label. This updated language aligns with our consistent expectation that Aduhelm will be prescribed mainly by specialists for patients in the early stage of Alzheimer's disease. And this update has been well received by the community, including prescribers, payers, and policymakers. Outside the U.S., we continue to engage with regulators regarding the ongoing review in Europe, Japan, and other markets, while also continuing to submit new regulatory filings around the world. In addition, we are pursuing early access mechanisms wherever possible, including in an early access program, and a charge-managed access program. We recognize that building a new market for Alzheimer's disease is an unprecedented undertaking, and that this is just the beginning of our journey as we aim to make Aduhelm and potentially Lecanimab accessible to patients around the world. We believe our teams are well-equipped to successfully execute on a well-defined strategy aimed at long-term leadership for Biogen in Alzheimer's disease. Second, this quarter, our pipeline delivered meaningful mid- to late-stage results in key areas, including depression, stroke, and biosimilars. The positive waterfall phase III trial of Zuranolone in major depressive disorder is a significant milestone towards bringing a differentiated potential treatment option to the 17 million patients suffering from depression in the U.S. alone. The observed rapid onset of benefit in as soon as three days, in addition to a differentiated tolerability profile and two-week dosing regimen underscore our belief that if approved, Zuranolone would be a multi-billion dollar product. We were also excited to see positive data from the Phase 2A trial of TMA07 in acute ischemic stroke. Stroke is a second leading cause of death worldwide, and those who survive may suffer irreversible damage of the brain. We are highly encouraged by the results of the trial, and we immediately moved forward with executing the option to acquire TMA07. Should both Zuranolone and TMS07 be approved, Biogen would be in a leadership position in offering novel therapies for Alzheimer's disease, the number one neurodegenerative disease, depression, one of the most common mental health disorders, and stroke, a leading cause of neurologic disability. In addition to these redoubts, we had a positive phase three redoubt for our biosimilar-deferencing Actamira, With these positive results in hand, we begin to prepare for a regulatory filing. As with any company engaging in breakthrough science, we also had setbacks in some programs, including our anti-Tau antibody in Alzheimer's disease and our gene therapy programs in ophthalmology. Third, we reported a solid quarter as we continue to execute well across our core business of MS, SMA, and biosimilars, and we are pleased to be raising our revenue guidance for the year, which Mike will discuss. Q2 overall MS revenue, including all previous royalties, was $1.8 billion. Putting aside the entry of tech federal generics in the U.S., our broader MS business continues to demonstrate resilience, with a 5% increase in patients worldwide. These performances underscore our ability to execute well. We were very pleased to see continued revenue growth for Vumerity, which remains the number one oral MS product in terms of new prescriptions in the US. We believe this performance is a testament to Vumerity's strong product profile. Given the progress of the Vumerity's launch to date, in addition to planned ex-US launches, we believe Vumerity can reach over a billion dollars in annual sales over time. We also continue to invest in new potential treatment to address the remaining unmet medical needs for MS patients. Last week, we announced a license and collaboration agreement with InnoCare for Orelab Rutinib, an innovative CNS penetrant phase 2 BTK inhibitor for the potential treatment of all forms of MS. This transaction is subject to customary closing conditions. Next, Spinraza. generated second quarter global revenues of $500 million. While Spinraza is facing competition in the U.S., which has been exacerbated by the impact of COVID-19 pandemic, we were encouraged to see that Spinraza's discontinuation continued to decrease versus Q1 of this year. Total revenue in the U.S. was flat versus the prior quarter, and Spinraza continued to perform very well outside the U.S., with 23% revenue growth versus Q2 of last year. Spinraza remains the market-leading treatment for SMA and we stand behind Spinraza's proven efficacy and well-established safety profiles across all types of SMA. In fact, our market research indicates that Spinraza's perceived efficacy among adults has improved over the past year and exceeds the efficacy perception for therapeutic alternatives, including risdiplam. Although we face near-term competitive pressure in SMA, we believe Spinraza can continue to grow over the medium to long term, both in the U.S. and globally, driven by overall market growth, the efficacy and safety profile in all age groups, continued data generation, particularly in older patients, and further geographic expansion. Our biosimilar business delivered revenue of $2 or $2 million this quarter. While we remain focused on executing against our currently marketed therapies, we also look to expand our portfolio, including our recent collaboration with BioThera and a positive CHMP opinion for our biosimilar referencing Lucentis. Fourth, We still have two key Phase III readouts anticipated in the remainder of 2021. This includes the Phase III study for Tofersen, potentially the first genetically targeted therapy for ALS, as well as an additional Phase III for Zuranolone in major depressive disorder. Given the incredible unmet medical need in ALS and encouraging results, From the prior Tofersen trial, we recently initiated an individual compassionate use program to provide Tofersen to the most rapidly progressing patients suffering from SOD1 ALS. Taken together, these developments represent a significant step forward in our goal of transforming Biogen from what was once an MS company to one that is built upon a multi-franchise portfolio across a broad spectrum of neuroscience therapeutic areas. I would like now to turn the call over to Al for a more detailed update on our progress in R&D.