Biogen Inc.

Please stand by, your conference is about to begin. Good morning, my name is Melinda and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Biogen first quarter 2025 earnings call and business update. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you'd 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. Today's conference is being recorded. Thank you. I would now like to turn the conference over to Mr. Tim Power, Head of Investor Relations. Mr. Power, you may begin your conference.

Thanks, Melinda. Good morning and welcome to Biogen's first quarter 2025 earnings call. During this call, we'll make forward-looking statements which involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review. Our earnings release and other documents related to our results, as well as reconciliations between GAAP and non-GAAP results discussed on this call, can be found in the investor section of Biogen.com. We've also posted the slides to our website that we'll be using during the call. On today's call, I'll be joined by our President and Chief Executive Officer, Chris Viebacker, Dr. Priya Singhal, our Head of Development, and Robin Kramer, our Chief Financial Officer. We'll 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. I'll now turn the call over to Chris.

Thank you, Tim. Good morning, everybody. Maybe first, a warm welcome to Robin. This is your first quarter as CFO of Biogen, Robin. So we had a very good start to the year, a strong quarter. You know, Biogen is really a tale of two companies in my view. There's one company which has been an MS company, and that portfolio, as you all know, has been gradually declining. But there's a new bird, Biogen, emerging. And when I look at the rare disease business and IADS or ZUVE and the KEMBI, and Vumerity, we actually have a commercial portfolio that we're actively promoting that's now gotten to be about 45% of our product revenue. And those products mostly have a very long runway to continue to grow. And so, you know, we've been talking about it for a few years, but I think now this is actually starting to become visible. We're rolling these products out worldwide. You know, we had the approval of Lekembe in Europe, for example, which is very important approval. But, you know, we've also seen the approval of SkyClarus in the U.K. and Brazil. Of course, the next lever of growth is going to be our pipeline, and there we're very happy to get the FDA fast-track designation for our ASO-targeting BIB80. That's remarkable since we haven't actually even read out Phase II yet, and I think is a sign of confidence in the importance of this potential new medicine in treatment of Alzheimer's. And, of course, we've initiated the Phase III TRANSCEND study for felzardamab in AMR. And, of course, we've always said we've got a very strong balance sheet. We're going to continue to patiently and in a disciplined way augment the pipeline through external innovation. And we're very happy about the partnership that we built with Zorro-Vernusen in Dravet syndrome with Stoke. That's going to be an important medicine. We have that for the territories outside the United States. Now, if we turn to where we are on these new product launches, so Lakembi, I mean, look at that, 96 million. That's almost $100 million. Now we're into serious product territory. We have, as I said, obtained the marketing authorization in the EU, and It's important not just because of the market potential in the EU, but now we can say that this is a drug that has been recognized for its importance, its efficacy, its safety profile by all major regulators in the world. And that's an important sign of confidence. This is, again, the first disease-modifying agent that has ever been approved in Alzheimer's. This is a brand-new territory. And I think having that kind of regulatory endorsement is extremely important. Now, as we all know, this has been a challenging product to launch given the workload that this applies for the treating physician. And we're looking very much forward to a number of the innovations that are coming along that we think can actually reduce that workload. First, of course, is one we have in the bag in the first quarter, which was the approval for the IV maintenance, which will allow us to reduce the dosing for patients after 18 months of treatment to once per month. Then we're going to make that even easier for physicians with hopefully an approval in August for the subcutaneous formulation, and that offers the potential of at-home administration with an auto-injector. And, of course, in the first half of next year, we're looking forward to the approval, hopefully again, of the subcutaneous formulation for initiation, which will dramatically reduce the need for infusion bed capacity. In addition, of course, this isn't related to ACI or Biogen. These are independent companies, but there are companies who are pursuing approval for biomarker tests, blood-based biomarker tests, And hopefully at some point we'll be able to see those blood-based biomarkers supplant the need for PET scans and or lumbar punctures. So there's an awful lot of catalysts coming for Lekembe. Well, we're very much encouraged now that we've got critical mass behind this. We've also launched a new approach on commercialization from 1st of April. We and our partners, ACI, have spent a lot of time going back through the data, thinking about the lessons learned, and have adapted our commercial approach. And one of the things, for instance, that we will be doing this year is now starting direct patient engagement in Alzheimer's. Now, switching to Zerzuve. This is a product that continues to do nicely. We had Q1 sales of 28 million. Since launch, we have now been able to treat 10,000 women with PPD, and the majority of those prescriptions are actually first-line therapy for postpartum depressions. A lesson that we learned along the way was actually the physician who is the most important in treating postpartum depression is actually not the psychiatrist, but the OBGYN. So 80% of our scripts in Q1, for instance, were from OBGYNs. One of the most important things here is you're talking about a one and done treatment, essentially. And so to make this commercially viable, you actually need to have writers expand. And we did see that. So we were able to expand the number of physicians writing this by 20% in Q1. But more importantly, it's getting physicians to write repeat prescriptions. And one of the most encouraging things is that we're not only seeing the repeat prescriptions, but I think as physicians gain the experience with Zirzuve, they're also gaining the confidence to actually go and be more proactive about diagnosing postpartum depression. And so I think we're actually seeing a virtuous cycle here where this positive response by patients is encouraging, you know, a greater attention to a disease that unfortunately, I think has been sadly neglected for so many women. So very good progress on Zerzuve. We've completed our own field expansion at Biogen, and that's been in place since the middle of the quarter. Now, if I turn to Skyclarus, we had worldwide sales of $124 million. That's up 59% year over year and 21% quarter on quarter. We did have some effect from the IRA. You all know about the Medicare tax that has been put in place, and that had an effect. Actually, our gross sales in the US rose faster than our net sales in this quarter. One of the things about this disease, of course, is that this is in European origin as a genetic disease. And essentially, where you find the patients is where all the European explorers went in the world. But logically, of course, the biggest number of patients is in Europe. And there we have had an awful lot of success in finding patients. It's actually, I think, easier to find them in Europe because they tend to be in centers, whereas they tend to be all over the country in the U.S. But even in the U.S., our U.S. team has been very creative in thinking about new tools to identify where patients are and find them. I can remember... years ago with the acquisition of Genzyme, learning the key marketing component of rare disease, and that is finding needles in haystacks. And that's what this is all about, is looking through social media, following family trees, and looking for patients. And so how are we doing on that? If I could see the next slide. You can see that we've got a nice steady growth in patient numbers. We've got about 2,400 patients on therapy globally. It's now available in 26 markets. I would caution that not all of those patients yet are paying patients. We have had an approach of having early access much higher than the average analog rare disease launch and actually in line pretty much with the Spinraza launch. I wasn't here for that, but as we've gone back and looked at it, the Spinraza launch was actually one of the best, if not the best, launch of a rare disease product. So we're very happy with the progress of SkyClarus. Brazil approval is actually a very important market for us. There are a lot of patients in Brazil, again, going back to where Europeans went in the world. And having been in Brazil last year and met with a number of physicians, I know that this approval will be very welcome to patients there. Moving on to the pipeline, you know, I think we made an awful lot of progress here as well. I mean, you've heard me say, I think, time and time again that, you know, I think we had an extremely high-risk pipeline when I came here. First of all, it was highly concentrated in neuroscience. And that's always an issue when you only have one therapeutic area. But neuroscience was also a little complicated because we don't always understand the underlying disease biology. The slowly progressing nature of those diseases mean that you often couldn't do a phase two study. And so you go immediately into a phase three study. So you end up doing incredibly expensive proof of concept studies as phase three. Now, neuroscience is who we are, and we've not wanted to abandon that by any means. There's huge unmet need. But we did feel that we needed to add another pillar to our company's future growth. And the logical place to go was immunology. We've been in immunology since the founding of our company, particularly through MS. And, you know, I quote my... my good friend and former colleague, Elias Zerhouni, you know, who often said we describe too many diseases by their symptoms and not by their cause. And when you get into immunology, actually, what's important is really the immune pathways. And that can lead you into a whole number of different indications. And that is something that Biogen actually understands very well. And so you can see on the left chart, we've been able to balance this now. We have got a nice balance between neurology, which has been the pride and home of Biogen for many years, but also, I think, immunology, where I think we have a very strong right to play. And then, of course, with that, concomitantly, if you look at the right chart, in immunology, one of the things you can do is do a proof of concept. And, you know, Felzardamab is probably the best example of that. That is an ideal product where we've been able to get a very strong proof of concept. There is never a guarantee in any clinical trial, as all of you know. But I think as we look at the phase three clinical trials for Velzartamab, that, you know, we feel a whole lot more confident about that than some of the other trials where, you know, again, we haven't had that. And so as you look at our pipeline, you know, I think if I could go to the next chart, you know, first thing I would point out, we have five phase three studies that are initiating this year. And that's important from a number of points of view. First is obviously there is a huge potential that is behind all of those products, and we're getting into late-stage development. So it's a sign of maturation of our pipeline. But the second thing is we're also increasing the number of shots on goal. We're not dependent on one or two projects. And we're going to continue to build that. And I guess the third thing I would point out is, you know, we have a number of data readouts that are coming. And so as we move into phase three, we'll be able to also have some important readouts already in 2026. And I think that's a nice cadence that is going to help underpin the continued emergence of that new biogen. So I think very good progress, and Priya is going to talk more about that. And I guess the last topic I would just cover is one that I think is on everybody's mind, which is tariffs. It's a new topic for us all. In 35 years in this industry, I've never had to spend as much time as we as a team have on tariffs in the first quarter. This is a very complicated area, and I know for investors, this is very complicated. And I did want to point out a number of features of Biogen, which I think differentiate Biogen from some of our colleague companies in the industry. And a number of you have been using, for instance, the tax rate as a surrogate for what the tariff exposure might be. And I would submit to you that that's actually not appropriate in the case of Biogen. And it's for a couple of important reasons. The first is that when you look at our product sales, 75% of our 2024 US product revenue was attributable to products that already have manufacturing operations in the US. And in fact, Biogen actually exports more than we import. And as a result also, we also pay an awful lot of tax and Robin will talk about that, but we pay taxes in the US at federal and state rates. But the other structural difference is that approximately 55% of our 2024 product revenue came from countries outside the US. Now that's pretty unusual in our business. In most of this industry, what you see is 60 to 80% of product revenues come from the US. Biogen is a whole lot more diversified and that's really a function of the products that we have. So as we look out for 2025, Obviously, there is an exemption for the moment in place, and we know that the whole tariff situation is changing daily, and it's difficult to predict. But at least what we can say is even if we lost the exemption and all of those tariffs that were announced by the U.S. administration on April 22nd were to actually not only come into being but also apply to pharmaceuticals, this would still not affect our 2025 financial outlook. That's partly because of the long supply chains we have. It's partly because, and I have to credit our supply chain team, they've built levels of inventory, not just of products, but also of different ingredients and materials because, again, this is a highly complex area. But just structurally, you know, we are more of a U.S.-based company and always have been, and actually we're quite proud of that. So with that, I'm going to pass that on to Priya to pick up the story on R&D.