Biogen Inc.

Good morning. My name is Katie and I will be your conference operator today. Good morning. My name is Katie and I will be your conference operator today. At this time, I'd like to welcome everyone to the Biogen fourth quarter and full year 2023 earnings call 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 1 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. Today's conference is being recorded. Thank you. I would now like to turn the conference over to Mr. Chuck Triano, Head of Investor Relations. Mr. Triano, you may begin your conference.

Thank you, Katie. Good morning and welcome to Biogen's fourth quarter and full year 2023 earnings call. Before we begin, I'll remind you that the earnings release and related financial tables, including our GAAP financial measures and the reconciliation of the GAAP to non-GAAP financial measures that we will discuss today, are located in the Investors section of Biogen.com. 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 the slides on our website that will be used during this call. I'd like to point out also that we'll be making forward-looking statements, which are based on our expectation. 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 President and Chief Executive Officer, Chris Feebacher, Dr. Priya Singhal, Head of Development, and our CFO, Mike McDonald. Chris, Priya, and Mike will each make some opening comments, and then we'll move to our Q&A session. To allow us to get through as many questions as possible, we ask that you limit yourself to one question. With that, I'll now turn the call over to Chris. Thank you, Chuck.

Good morning, everybody. A year ago, I had the opportunity of presenting Biogen's quarterly results for the first time. At that time, we expressed the objective of returning Biogen to sustainable growth. And I think in the intervening year, we've made substantial progress. And today, it is a great amount of pride and pleasure that we can announce earnings guidance, which Mike will go into in greater detail, which says that we are expecting to see positive earnings per share growth. And, you know, as I have said on a number of occasions, once we can get Biogen growing, We really see Biogen becoming a growth company for the foreseeable future. We have very little, in fact, no exposure to Inflation Reduction Act with our current portfolio. We don't have any new patent expiries really coming in any time soon, other than those that are already known. And I think we've undertaken a number of other measures that really reposition Biogen for growth. If I just review some of those things, the first was really to refocus the company on growth drivers, in particular, our new product launches. Biogen had four new product launches from approvals from the FDA last year. That's the second highest of anyone in our industry. And, you know, that required, though, quite an awful lot of cultural change. The multiple sclerosis franchise has been the stalwart of our company since its inception 45 years ago. Our people are passionate about the physicians who treat multiple sclerosis and the patients who have multiple sclerosis. And we are still a market leader in this space. However, that is a franchise that is facing increasing competition. And we have to embrace new therapeutic categories and new businesses. really had a major shift in resources and focus, particularly towards Lakembi, Zerzuve, Asciclaris, and Calzadi. We also, though, have still some products with patent protection, again, with substantial competition. And if I take a product like Spinraza, analyst forecasts had shown forecasts that this product would decline. particularly proud of our teams in demonstrating that they could bring this product back to actually even modest growth. Obviously, the mode of administration of products can be a competitive advantage. So if you have a pill, you're going to be a lot more preferred than if you have an infusion, for example. But what we see in some of these really devastating diseases is that efficacy is still the most important factor, and that is why Spinraza continues to be a leader in its segment. Biogen is extremely good at being able to develop the medical evidence to support the value proposition of its products. As many of you told me when I first came into the company, you've got a mature product portfolio, but you've got one of the highest cost bases in our industry, and we took steps to address that. But it wasn't just around reducing costs. We wanted to re-engineer the business. We were shifting our focus, entering new therapeutic categories, and we needed to think about capabilities. We needed to think about the agility of the organization, the number of layers of management that we have. And so we implemented a fit for growth re-engineering project. We've already achieved $200 million of savings, and we're on track to realize approximately half of the $800 million of net savings by the end of 2024. That's, of course, a gross savings of a billion dollars. And then we had to look at research and development. Biogen is an extremely interesting company. All of the diseases that Biogen targets are really devastating diseases. We target and there's a lot of pride in the fact that we go and try to find solutions for diseases where nobody else is doing that. But of course, that you're pioneering, you're pioneering because we don't really understand often the underlying disease biology of these conditions. And so we end up taking a lot of risk and these trials can be really quite expensive. And yet we do need a company like Biogen in our world. And so our objective has been to really focus research and development investments on those products that will have the greatest impact. And of course, we have to manage the risk in the portfolio. We have to have Biogen as a sustainably growing company and one which is attractive to investors. We need the capital to go and invest in new projects. And so I think with Priya's help, we've been able to take an extremely disciplined and objective view to the pipeline. We have four data readouts this year, again, on extremely important illnesses, and Priya will talk more about that. And as we go into next year, we're going to be looking at how do we reinforce that pipeline? How do we rethink our research efforts? A lot has changed in science, but we haven't necessarily done that kind of change at Biogen. So I think research and development is extremely important to Biogen, and I think continue to be a source of growth for the future. Now, as we look at what does drive growth, clearly we have Lekembe. And, you know, I'll remind everybody that, again, we are not just pioneering in science, but pioneering in commercial. One of the interesting things about this disease is that, you know, if we talk about the efficacy of the product, You know, a lot of cases, we're looking at the characteristic of a product. But actually, when you talk about efficacy, you're talking about, are you in the right patient? And in fact, for decades, our industry invested in drugs, which failed to demonstrate a benefit in Alzheimer's disease. And there were two main problems with that. One was we couldn't get enough drug across the blood-brain barrier, and we weren't in the right patient. Clarity was the first study to really convincingly demonstrate the the importance of reducing plaque and the impact on cognition. But we know that from data that we showed at CTAD that we believe that the earlier you can go, the more likely it is you're going to show even greater efficacy because we're not, you know, we're really in the business of trying to protect neurons or create an environment where injured neurons can recover. And so we have a huge investment in our head study to look at pre-symptomatic patients. We're investing in what happens when you remove the plaque and looking at maintenance. We're trying to make this more convenient for patients by having a subcutaneous formulation. And so the pioneering continues. And the pioneering also is out there in the marketplace. Patients with Alzheimer's are not in the system today. and are coming into the system. So we've got approximately 2,000 patients on therapy at the moment. Now, we don't have, as companies, direct access to the patient registries. You all know about the CMS registry, but there are a few other registries out there, like Altenet, for example. And we have seen some analysts have been able to access that data. There was one analyst report of 3,300 patients on the registry. latest information that we have, and again, this is not perfect information, but we have an indication that there are about 3,800 patients as of last week on the registry. When you look at that, that suggests we're getting about 260, 265 patients per week in the month of January. And as far as we can tell, that's about a 56% increase over what we were seeing in December. So we are clearly seeing that there is demand for the product. We're clearly seeing that IDNs are moving to put in place the care pathways and the treatment protocols to improve access. 70 out of the top 100 IDNs have had positive P&T committee decisions. 80% of those have now actually ordered Lekembe. But, you know, if we talk to the people who are doing the PET scans, the MRIs, the people who sell the blood diagnostics, everybody is reporting increased activity and volume. And so, and as you saw with ASI's results, their belief is that, you know, for all the patients on treatment, there are at least three or four-fold of those who are actually in waiting rooms. we do believe we're making very solid progress, and we believe that we have validated the go-to-market model. And now that we have enough IDNs with reimbursement and care pathways in place, we believe it's also time now to increase our level of promotion out there. And so, as ASI has announced, we will be expanding total U.S. field force by about 30%. And as was already previously agreed last year, that once we had the go-to-market model really validated, that it's now time for Biogen colleagues to also go and visit physicians. And, of course, we've seen the launch in Japan. I was there for the launch meeting, and Biogen is very proud to be working alongside our colleagues from ASI on the launch in Japan. And we've seen that it can be approved in China, and that launch will be later this year. So everywhere we look with Lekembe, we are making solid progress. This is, as we have said before, a launch that really doesn't have an analog. We have always guided investors to the fact that this would be a progressive ramp, and that's what we're seeing. And we continue to believe in the long-term importance of Lekembe, both to patients and to our financial results. Moving on to Sky Clarus. You know, you've seen the launch numbers for the U.S. We have about 1,000 patients now on therapy. We don't have a pediatric indication yet, so the potential population is about 4,500, so we've got a little over 20% of the patients on therapy within about six months of launch. There's an awful lot of complexity to launching these rare diseases, and I think this is where Biogen has an awful lot of strength There's a lot of logistics issues with specialty pharmacy and reimbursement. And so we have already been able to demonstrate that we can reduce the time from the start form to shipment by 45%. We've got about two-thirds coverage out there in terms of reimbursement. And of course, patients and their physicians need an awful lot of support out there. And so we have patient services and family access managers who are assisting patients and physicians to navigate the care pathways. One of the things that we see with Spinraza is that we do about a third of our sales in the US and two-thirds ex-US, and we expect that to be a model for Skyclarus. Last night, we announced the formal approval by the European Commission for Skyclarus. We have an expanded access program in a number of European countries, and we are in the process of setting those up in other countries, including those outside of the U.S. We have a global filing strategy that is underway to make sure that all patients with Friedreich's ataxia can benefit from Skyclarus. And, of course, we are actively working on doing the studies that would be needed to obtain the indication for children under age 16. Zerzuve, postpartum depression, enormous unmet need. Tremendous media coverage. You know, we're talking about maternal health and we're also talking about mental health. And those are two key trends in our societies today. It has been difficult often for mothers to seek treatment and get treatment. It's estimated about 80,000 women are diagnosed every year, but the incidence is believed to be way in excess of a half a million. So there's an awful lot of work to do to really get outreach to women who are suffering from postpartum depression. I have to say, the initial indications of launch are well above expectations and very promising. But, you know, it's six weeks of data, so I think we want to see more data to really come to any firm conclusions. But everything that we are seeing is extremely positive. You know, we were originally positioning this product for major depressive disorder, and we pivoted to postpartum depression. That meant we've had to go back and recontract with payers. I have to say I'm highly appreciative of payers because they have actually been honoring prescriptions even though we haven't got all of our contracting in place. And I think that is actually also helping with demand. So, with that, I'll turn it over to Priya because I think increasingly what we'd like to also start to talk about is not only what we're selling but the new hope for patients that's coming out of our pipeline. So, I'll turn that over to you, Priya.