Biogen Inc.

Good morning. My name is Madison, and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen fourth quarter earnings call and financial update. All lines have been placed on mute to prevent any background noise. After the speakers and marks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. Please limit yourself to one question to allow other participants time for questions. If you require any further follow-ups, you may press star 1 again to rejoin the queue. Thank you. I would now like to turn the conference over to Mr. Michael Henke, Head of Investor Relations. Mr. Henke, you may begin your conference.

Good morning, and welcome to Biogen's fourth quarter 2021 earnings call. Before we begin, I encourage everyone to go to the Investor 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. Today, we will be discussing Aduhelm. Aduhelm is indicated for the treatment of Alzheimer's disease. Treatment with Aduhelm should be initiated in patients with mild cognitive impairment or mild dementia stage of disease, the population in which treatment was initiated in clinical trials. There are no safety or effectiveness data on initiating treatment at earlier or later stages of the disease than were studied. This indication is approved under accelerated approval based on reduction in amyloid beta plaques observed in patients treated with Aduhelm. Continued approval for this indication may be contingent upon verification of clinical benefit in a confirmatory trial or trials. Aduhelm can cause serious side effects, including amyloid-related imaging abnormalities, or ARIA. ARIA is a common side effect that does not usually cause any symptoms, but can be serious. Aduhelm can cause serious allergic reactions. The most common side effects include ARIA, headache, and fall. Please see full prescribing information and patient medication guide at aduhelm.com. On today's call, I am joined by our Chief Executive Officer, Michelle Vounatsos, Dr. Priya Sinkhal, Interim Head of Research and Development, and our CFO, Mike McDonald. We will also be joined for the Q&A portion of our call by Alicia Limo, 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 Michelle.

Good morning, everyone, and thank you for joining us. I will start by briefly reviewing our financial performance, and Mike will provide more details. For the fourth quarter, Biogen generated approximately $2.7 billion in revenue, representing a decrease of 4% year-over-year as we continued to experience the erosion of tech federa revenue in the U.S. due to the impact of generic entry. Fourth quarter 2021 non-GAAP earnings were $3.39 a share. We believe this performance reinforces Biogen's ability to execute well However, given a number of challenges we have faced recently, we announced that we will implement cost reduction measures which are expected to yield approximately $500 million in annualized savings, and Mike will provide additional details. Let me now say a few words regarding the proposed National Coverage Determination, or NCD, for the class of monoclonal antibodies directed against amyloid for the treatment of Alzheimer's disease. As currently written, the proposed NCD calls for coverage with evidence development, or a CED, which will provide reimbursement only for Medicare beneficiaries enrolled in an approved randomized controlled trial. In reaching this proposed recommendation, the Center for Medicare and Medicaid Services, or CMS, highlighted three key areas of focus for this class of therapies, all of which have implications for Aduhell. First, CMS believes there are gaps in the data on the clinical benefit of these therapies. Second, CMS believes more information is needed about the potential risks of removing amyloid, principally ARIA. And third, CMS would like additional data to be generated on the underrepresented communities in which Alzheimer's disease is more prevalent. These are also areas of focus for Biogen with many important initiatives already underway. We are committed to constructive engagement with CMS to address their concerns, and we agree with CMS that additional data may be helpful to continue to characterize the benefit-risk profile for this class of therapies. Now that Aduhelm is approved by the FDA, we believe the most helpful data generation can really only be generated from greater drug utilization in real-world practice. We also agree with CMS that the final NCD decision should not lead to a duplication of ongoing activities. As currently postured, however, We believe the proposed CD requirements will be prohibitive for patients, overly burdensome, costly to companies, and duplicative of the data that will be generated from ongoing trials and the FDA's existing required post-marketing requirements. We believe the best way to address the concerns of CMS is to supplement the data from the Aduhelm Phase III studies We generated data over 3,000 patients by taking a multi-pronged approach, leveraging the Phase IV confirmatory study and vision, our Embark redosing study, which has enrolled approximately 1,700 patients, the ongoing eye care AD registry, the ongoing Phase III studies of all the antibodies in the class, and all the ongoing and anticipated real-world data generation efforts. We believe this extensive data generation opportunity will adequately address any open question regarding the clinical efficacy and safety of amyloid beta-lowering therapies. On this note, we expect to begin patient screening for the Envision study in May of this year, with a primary completion date anticipated approximately four years later. This is expected to be a global placebo-controlled trial aiming to enroll 1,500 patients with MCI due to Alzheimer's disease or mild Alzheimer's disease with confirmation of amyloid beta pathology. The planned primary endpoint will be CDR sum of boxes at 18 months with a planned long-term extension for up to 48 months. We believe this study, combined with the other studies I mentioned, should address the questions raised by CMS. Therefore, we will continue to advocate for an NCD that provides rapid and equitable patient access by providing coverage only for the patients identified as most appropriate for treatment in our FDA-approved label, which generally aligns to our Phase III clinical trial population. We also believe this multi-pronged approach will allow for more equal access in all communities. We have concerns that the restrictions of the proposed CED would unfairly exclude access for patients in underserved communities and geographically remote areas. In contrast, we expect both Envision and our iCare AD registry, which seeks to enroll up to 6,000 participants to obtain more representative data from those communities by aiming to enroll 16 to 18% of US participants from Black and Hispanic population. In summary, we will advocate for a final CD that strikes a better balance between patient access for an FDA-approved therapy today and the desire for additional data that can only be gathered over time and with higher levels of drug utilization in the real world. We look forward to discussing this consideration with CMS and working towards a final decision that is in the best interest of patients. Beyond the NCD last quarter, we presented additional data from the adjuvant phase three clinical trial showing the effect on downstream tau Alzheimer's biology and the correlation between plasma-PETA reduction and less cognitive and functional decline. In addition, we published the Phase III AREA findings in JAMA Neurology. As we look forward, we aim to expand both within and beyond neuroscience with a focus on four pillars to drive growth and value creation. We intend as a company to build on our strong foundation in neuroscience, where we currently have 26 programs in clinical development. Second, we have what we believe to be two compelling phase three programs in lupus. This is a therapeutic area with a different risk profile, and we are continuing to evaluate additional opportunities in specialized immunology. Third, Over the last several years, we have also built a very successful new business with our biosimilars. We recently announced an agreement to sell our stake in the Samsung BioAPIS joint venture to Samsung Biologics, with Biogen remaining in our current role as the commercialization partner for the Samsung BioAPIS anti-TNF portfolio and ophthalmology programs. We currently anticipate We currently anticipate that this transaction will close in mid-2022. Once closed, going forward, we will have an expanded ability to pursue the biosimilar business on our own as we aim to bring more biosimilar product to more patients in more geographies. Mike will provide more details. And lastly, we are also focused on accelerating our efforts in digital health to support our commercial and pipeline programs, while also creating opportunities for potential digital therapeutics. To this point, we have built a dedicated digital health portfolio, which includes the recently announced new collaboration with TheraPanacea with the aim of leveraging our significant database, but also machine learning, artificial intelligence, to develop digital health solutions that may improve patient care, accelerate drug development, and further the understanding of underlying pathologies. Our progress across these four pillars provides us with the potential for two future waves of growth as we launch in new therapeutic areas and build new franchises. First, over the next few years, we believe we have a significant potential in Alzheimer's disease and depression. two large therapeutic areas with significant and unmet needs. In Alzheimer's disease, we have a deep pipeline of clinical and preclinical assets, leveraging multiple modalities and targets, including both amyloid and tau. With aduhelm and leucanumab, Biogen and SI have two out of the four potential anti-amyloid antibody therapies that are either approved or in late stage development. In depression, we are collaborating with Sage Therapeutics on Zuranolone, which we believe has the potential to provide a valuable new option for patients suffering from major depressive disorder and postpartum depression. We believe our second future waves of growth anticipated in the mid to late 2020s will be driven by a number of diverse therapeutic areas, including stroke, Parkinson's disease, and lupus, with some of these programs already in phase three. These anticipated future waves of growth will be supported by our diversified pipeline, which today includes 32 clinical programs, 10 of which are in phase three of file. Additionally, outside of our core business, we are pleased to have recently exercised an option for Mosunetuzumab, a late-stage investigational bispecific antibody targeting CD20 and CD3 in development by Gentec for oncology and potentially other indication. Exercise of this option will provide Biogen with a profit share, while Gentec will lead strategy and implementation with an expected FDA filing in the near future. This builds on Biogen and Gentec's long history of productive collaboration which began with Fetuximab. Our focus in 2022 will remain on execution and agility, as we expect a number of important milestones. This includes the continued launch of Agilent in the US, the launch of Humerity in the EU, and our expected entry into the US biosimilars market with BioVis. We expect five data readouts, three of which are in phase three, and the completion of three regulatory filings in Alzheimer's disease, depression, and biosimilars. Before I turn the call over to Priya for an update on our progress in R&D, I want to first say how impressed I am by what I've seen from Priya, both as a head of safety and regulatory science, and most recently as our acting head of R&D. Her ability to lead, her strategic thinking, and her subject matter expertise give me the utmost confidence in her ability to advance our pipeline while we work to name a permanent successor. Please, go ahead, Priya.