Biogen Inc.

Good morning, my name is Jennifer and I will be your conference operator today. At this time, I'd like to welcome everyone to the Biogen first quarter 2024 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'd 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.

Thanks, Jennifer. Good morning, good afternoon, good evening, everyone, and welcome to Biogen's first quarter 2024 earnings call. Before we begin, I'll remind you that the earnings release and related financial tables, including our GAAP financial measures with the reconciliation to the GAAP and non-GAAP financial measures that we will discuss today, are 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 that 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 point out that we will be making forward-looking statements which are based on our expectations. 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, our Head and President of North America, Alicia Alaimo, our CFO, Mike McDonald, and Dr. Priya Sengal, Head of Development, is with us and will be available for the Q&A session. Chris, Alicia, and Mike will each make some opening comments, and then we'll move to the Q&A session. And to allow us to get through as many questions as possible, we kindly ask that you limit yourself to one question. With that out of the way, I'll now turn the call over to Chris. Thank you, Chuck.

Good morning, everybody. Well, it is certainly great to be able to announce earnings per share growth in our first quarter. This is the first time in several years that the underlying business performance of Biogen has allowed us to actually demonstrate earnings per share growth and That's a major achievement. We've clearly still got a lot of work to do, but I think it feels like we're turning the corner in the company. And with that, I'd like to actually take the opportunity to thank my Biogen colleagues. We have instituted an awful lot of change within the company, and I'd like to thank them for their commitment, passion, and patience throughout this process. But I think you're seeing some of that change that has occurred now in the numbers. We have tried to bring a lot more focus and discipline to really putting our resources behind those things that do good and drive value. And one of the things that you may not see is that there is an awful lot of reinvestment going on. One of my early bosses in my career once told me, you can't save your way to prosperity in this business. And that is absolutely true. And that's not really what we set out to do. The Fit for Growth project, which is, as you can see from the numbers, on track to achieve its $1 billion in gross savings and $800 million in net cost savings, and by the way, $800 million of increased cash flow as well, by the end of 2025. But what we really tried to do was redesign the organization. We have been so focused as a business for decades on our multiple sclerosis franchise, and Here we are launching four first in class new medicines, and we really needed to make sure we're supporting those launches. And in fact, despite the cost reductions and margin improvements that Mike's going to go into in more detail, but behind that, there are hundreds of millions of dollars being invested in new launches. And while our overall expense in research and development has decreased, this focus has actually enabled us to increase the investment in those assets where we have the most conviction. So this is much more than a cost savings exercise. This has been a redesign and a change in our culture to a degree. So, you know, let's look at some of these new launches. And obviously the one that everybody's most interested in is Lakembi, and if we can move to that slide. You know, you can look at this in a number of different layers. Obviously, first, we're seeing really good quarter on quarter trends. You know, as you've seen, the number of patients on drug has increased two and a half fold compared to where we finished the fourth quarter. Our in-market revenue almost tripled in Q1 versus Q4 of last year. And that's obviously important. You know, the thing that really is important to me as I look at this is not so much just that. You know, I've been in this business, you know, for three and a half decades. I've lost count of how many launches I've seen. But this is an extraordinarily difficult launch, really because the amount of change that physicians are facing with this is really profound. And as I go around to hospitals and talk to doctors and talk to those who are seeing other doctors, it really becomes evident that there are an awful lot of challenges to getting even that first patient on treatment. You know, we were at one hospital. It was going to take, it took them three months to get approval just to hire a nurse to help navigate the system. And another major medical center, they were having to develop a five-year business plan just to be able to access the infusion beds. And when you look at some of the uncertainty around PET scan reimbursement, and although CMS had clarified that, a lot of the MACs had pulled it through, there was still a lot of difficulty getting that clarity all the way through the channel. And, you know, what I'm really encouraged by when I look at these numbers is Although there are a lot of challenges, it's a lot of time investment for physicians. And I think a lot of those physicians, to their credit, are investing that time and not necessarily getting reimbursed for that. But they're getting it done. They're overcoming these challenges and barriers. And that is, I think, what is so important. They see the need when they look at patients who are accomplished people, who are loved by their families, and seeing this dreaded disease, pull the patient away from that on a day-by-day basis. So I do think we are seeing an awful lot of momentum here, and again, I think there's an awful lot of credit to the neurologists and to these centers to overcoming these challenges, and I think that is going to allow us to continue to see quarter-on-quarter growth. It may not be completely linear, and Alicia will go into more detail on that, but It takes time to get these protocols in place. And even when you get the first patient, there has been a tendency to let's have a handful of patients so we get comfortable with the system. But then once they've done all that, then we're starting to see volume pull through. And one of the interesting things about this launch is that generally we look at revenue as a surrogate for demand. And here that linkage is not quite so clear because it has taken this upfront time before you see revenue pull through. And I think that's one of the other things we're now seeing in this first quarter is that we're actually seeing a little bit more of that linkage between demand and revenue. And behind all of this, once those processes are in place and once physicians are ready, there's clearly an underlying demand behind that. So I think That has given us a lot of confidence to now invest more. We have a 30% expansion in our U.S. field force plan. But I would also say, you know, this is a launch that really didn't start until 1st of September. And even then, you could argue we weren't fully in the mode of being able to launch because the PET scan reimbursement hadn't been cleared. But, you know, our U.S. teams for both AHAI and Biogen have done an awful lot of work to look at the data from the first seven months of the launch. And really, we're now looking at redeploying some resources here and there as we see what's important and what's not. I think the teams are really working well together. And we have a number of new elements of our promotional mix that will start to come into play as we progress through the second quarter. From a Biogen point of view, I think it's too early to put out any forecasts. We're going to be looking at those month-over-month new patient starts and the increase in revenue, but I would certainly say I'm extremely encouraged by the progress that has occurred. Now, if I could switch gears to another key growth driver, which is Guy Claris. And Alicia, again, will go into more detail and I think also just show investors how we're progressing versus other analogs because the rare disease market doesn't behave so typically as in other markets. There's always a catch-up population in rare disease. And so it takes a while for that catch-up population to work through the system and then have a look at what's the underlying demand. Remember that these are not patients sitting in waiting rooms and that there is a huge amount of work that goes into finding patients. And I think that is actually one of Biogen's strengths. That's, I think, what gives me the confidence to continue to invest more because I do think there is a know-how within Biogen. And that's one of the reasons we want to build out a rare disease franchise. But, you know, we've got 1,100 patients now on therapy in the U.S. That's a really significant number. But I'm also really encouraged by the launch in Europe. We've already got, and remember, this drug was only approved at the end of January, and yet we already have 300 patients on treatment. You all know Europe. We have to go country by country to get reimbursement, and we have early access programs. Some of those we can charge revenue for. Some of them we can't. But we have already submitted reimbursement dossiers in five countries in the U.S. So I think Europe will increasingly add to the revenue. It's probably more of a 2025 story than a 2024. But I think if I'm looking at the acceptance and the uptake, then that launch is also off to a successful start. And we know that there are an awful lot of patients in Latin America, and we've already submitted in Brazil, for example, and submitting in Argentina. And I think that actually is going to be a major benefit and opportunity for us as well. Remember, there are no patients in Asia because this is a genetic disease that really affects people of European descent. And in fact, it was quite interesting. I was talking to a key opinion leader in Germany who's actually done genetic studies and you basically just follow where the explorers went and that's where you're going to find the patients. So I think with that, let's dive in a little bit deeper and I'll turn it over to Alicia.