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 speakers 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 one 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 gap and non-gap 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 V. Backer, 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 biogen emerging. And when I look at the rare disease business, and I add Zuvay and the Chembi and Vimeridi, 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 Lechembi in Europe, for example, which is very important approval for us. But, you know, we've also seen the approval of SkyClarus in the UK 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 FastTrack designation for our ASO targeting BIB 80. That's remarkable since we haven't actually even read out Phase 2 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 3 Transcend study for Pelsartumab 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 on Zorovinusen and 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 Lechembi, 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 A.si. 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 leukemba. 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, A.si, 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 Zirzouve, 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 percent 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 percent in Q1. But more importantly, it's getting physicians to write repeat prescriptions. And one of the most encouraging things is that we are we're not only seeing the repeat prescriptions, but I think as physicians gain the experience with Zirzouve, 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 a greater attention to a disease that unfortunately, I think, has been sadly neglected for so many for so many women. So very good progress on Zirzouve. 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 dollars. That's up 59 percent year over year and 21 percent 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. You know, one of the things about this disease, of course, is that this is a 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 US. But even in the US, our US 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 and 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. 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 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 Zahouni, 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 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, Felsartumab 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 Felsartumab, that, you know, we 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 then 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 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 percent of our twenty twenty four 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. We pay taxes in the US at federal and state rates. But the other structural difference is that approximately 55 percent of our twenty twenty four 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 percent 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 twenty twenty five, you know, 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 US administration on April twenty second were to actually not only come into being, but also apply to pharmaceuticals. This would still not affect our twenty twenty five financial outlook. That's partly because of the long supply chains we have. It's partly because I have to credit our our supply chain team. They built in 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 US 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.

Thank you, Chris. This quarter, we made significant progress, advancing and expanding our high conviction late stage pipeline. We believe our pipeline will play a critical role as we work to deliver sustainable long term growth enabled by increased momentum in our data flow. This includes potential key approvals this year and expected registrational data starting next year. This quarter, we delivered key milestones across Alzheimer's, immunology and rare disease. First, as Chris mentioned, our TAU targeting ASO, BIP-80 received past track designation from the FDA in Alzheimer's disease in April. Alzheimer's is a complex and fatal disease that we believe will require multiple therapeutic approaches to address its diverse pathologies. BIP-80 is a differentiated approach to targeting TAU and the fast track designation was based on encouraging phase one B data, which showed dose dependent CSF TAU reductions, decreases in TAU pet signal and favorable trends on acceleratory cognitive and functional measures. In immunology, we initiated the transcend phase three study of Felsartumab in AMR. This is the first of three phase three studies that we expect to initiate this year for Felsartumab with additional studies in IGAN and PMN anticipated by mid year. And importantly, we expanded our late stage rare disease pipeline where we acquired rights to Zorovir-Nursen in Dravet syndrome in all territories outside the United States, Canada and Mexico. Dravet syndrome is a developmental and epileptic encephalopathy characterized by severe recurrent seizures and importantly, significant cognitive and behavioral impairments. Importantly, more than 90% of patients continue to experience seizures despite treatment with the best available anti-seizure medicines and there are currently no medications approved that meaningfully address the underlying cognitive and behavioral aspects of the disease. Zorovir-Nursen is an investigational ASO that is designed to potentially for the first time treat the underlying cause of Dravet syndrome by increasing the NAV 1.1 protein production in brain cells. What encourages us about this asset is the phase one to a data that we've seen. Specifically in respect to cognition and behavior as well as seizure. And looking at the right hand side of this slide, you can see why. Cause on the Vineland 3 a widely used standardized assessment of behavioral outcomes show that Zorovir-Nursen resulted in substantial improvements across multiple measures of cognition and behavior. This was initially observed within the phase one to a study with continued improvement in the open label extensions out to two years. We believe these results support the potential for Zorovir-Nursen to be the first disease modifying therapy in Dravet syndrome. We look forward to working with STOKE on advancing the phase three Emperor study, which we expect to initiate in the next few months. We continue to remain focused on advancing the standard of care in Alzheimer's and I believe we've made significant progress. Starting with Likimbi, we are really excited about the recent approval in Europe. We're also continuing to advance the subcutaneous formulation for both treatment maintenance and initiation to further aid patient optionality and convenience. Furthermore, we believe that the strength of the Likimbi real world data continues to support the urgency to treat symptomatic early AD patients today. And we look forward to the potential of blood based diagnostics to help remove barriers in the healthcare system. I also believe it is important that we continue to execute on the opportunity in pre symptomatic AD. Clarity AD established that removing plaque in a symptomatic early AD population leads to clinical benefit and that symptomatic patients with low or no TAU can potentially achieve an even greater benefit. And we believe a head 345 is the right study designed to evaluate the potential benefit of Likimbi in a true pre symptomatic population. Beyond Likimbi, we continue to treat target Alzheimer's disease biology with the potential next wave of therapy, including viveti and novel delivery technologies. Overall, I'm encouraged by the progress we're making in Alzheimer's and believe we are well positioned to lead the evolution of the treatment landscape. Turning to the pre proof of concept pipeline, I'm excited again about the progress we've made in rebuilding this area of the pipeline. We are applying a strong scientific rationale as we invest in these programs using a disciplined data driven decision making approach as we aim to build out a sustainable pipeline with a promising pre POC pipeline. During this quarter, we made significant progress in this area, including completing enrollment in the phase 2 study for our LAK-2 inhibitor for idiopathic Parkinson's disease with Denali. Applying our approach to follow the science, these phase 2 data, which I expected next year, will help provide us with clarity on the potential path forward to phase 3. We will continue to maintain this approach as we work to grow the pipeline by introducing more assets into the early stage development, both from our organization as well as external innovation sources. With that, I would now like to hand the call over to Robin for a financial update.

Thank you, Priya. I'm pleased to be participating in my first earnings call since stepping into the CFO role. I'd like to begin by extending my gratitude to those in the investment community with whom I've had the pleasure of speaking with in my first few months as CFO, and I'm looking forward to spending time with many more of you in the near future. To start, I would like to provide a few highlights on our first quarter financial results. Please note the comparisons I'm about to make are versus the first quarter of 2024, unless otherwise noted. Total revenue for the first quarter of 2.4 billion dollars was up 6% year over year aided in part by the timing of Spenraza and corporate partner revenue shipments. Our four launch products delivered approximately 200 million dollars of revenue in the first quarter, an increase of 22% quarter over quarter and more than doubling year over year. First quarter non-GAAP diluted EPS was $3.02, which was down 18%. This includes the $165 million upfront paid in connection with the Stoke transaction, which impacted EPS by approximately 95 cents in the quarter. Absent that charge, first quarter non-GAAP diluted EPS would have been $3.97, up 8% year over year. In the first quarter, we generated $222 million of free cash flow, which includes the $165 million upfront paid to Stoke. We ended the quarter with $2.6 billion of cash. Shortly, I will provide an update on our full year guidance. Now I'll turn to a few comments on revenue and commercial dynamics in the first quarter. Starting with our MS franchise, our global product revenue declined 11% year over year, driven primarily by competition. This included impacts from a biosimilar for Tisabri in Europe and generic competition for TechFedera globally. We have started to see generics launch in certain countries in Europe, such as France and the Netherlands. While we will continue to vigorously defend our IP, we do expect to see further impacts from TechFedera generics in Europe this year. A bright spot for MS in Q1 was Vumerity, where we saw an increase in demand and Vumerity remains the number one branded oral therapy. For Spina Raza, we continue to be encouraged by the consistency and demand globally, which includes growth in the US of 4% year over year. In the first quarter, ex-US Spina Raza revenue benefited from a one-time VAT refund and the timing of shipments in certain markets, which together was a benefit of approximately $26 million versus Q1 of 2024. And as I mentioned earlier, our four launch products together delivered $200 million of revenue to Biogen in the first quarter, an increase of 22% quarter over quarter and more than doubling year over year. We continue to see steady sequential growth of LeCembe with first quarter global in-market sales, booked by ASEI, of approximately $96 million, up approximately 11% sequentially from the fourth quarter of 2024. Global SkyClarus revenue was $124 million, a sequential increase of 21% versus the fourth quarter of 2024, driven by continued geographic expansion outside the US. Revenue for SkyClarus in the US was $69 million impacted by expected Medicare discount dynamics, partially offset by demand growth. And both Cersurvey and Kelsati continue to grow sequentially, driven by increases in demand for each product. The increase in corporate partner revenue in the first quarter was driven by the timing of certain batch commitments related to our contract manufacturing business, some of which was associated with batches of LeCembe. We continue to believe that corporate partner revenue will be roughly consistent when comparing full year 2025 with full year 2024. Due to planned maintenance activities and the timing of batch releases, we expect minimal corporate partner revenue in Q4. I'll now turn to a few comments regarding expenses. First quarter non-GAAP cost of sales was impacted by increased lower margin contract manufacturing revenue. Non-GAAP core operating expense, or R&D plus SG&A expense, decreased 1% year over year as benefits from our R&D prioritization and Fit for Growth initiatives allowed us to absorb incremental spend associated with our advancing and expanding development pipeline, as well as our product launches. Non-GAAP operating income included approximately $201 million of acquired in-process R&D charges, including the $165 million upfront payment made in connection with the Stoke transaction, which had an approximately 95 cent impact to EPS. Excluding the $165 million upfront payment, non-GAAP operating income would have been $748 million, up 7% year over year. As a reminder, we and our peers are required to present upfront and milestone charges in-GAAP and non-GAAP operating results. Commencing this quarter, we will break out acquired in-process R&D, including up-fronts and milestones in a separate line item in our P&L. Consistent with many of our peers, we believe this provides better transparency about our core R&D activities and business development activities. We plan to disclose a schedule of expected charges for each quarter ahead of our earnings calls to aid in modeling. Now I'd like to provide a brief update on our balance sheet. We generated $222 million of free cash flow in the first quarter, which takes into account the aforementioned $165 million upfront payment to Stoke. We ended the quarter with $2.6 billion of cash and approximately $3.7 billion of net debt and believe that our balance sheet remains strong, allowing us to continue to invest in both internal and external growth opportunities. Turning now to guidance, we are pleased that our expected underlying business outlook for the year has not materially changed. We are updating our full-year EPS guidance to reflect the approximately $0.95 impact from the Stoke transaction, along with $0.20 of an earnings tailwind from foreign exchange impacts from a weaker US dollar. We now expect our full-year 2025 non-GAAP diluted earnings per share to be between $14.50 and $15.50. We continue to expect total revenue for 2025 to decline by a -single-digit percentage, driven primarily by an increased decline in our MS business. We expect that our launch products will generate sequential revenue growth, but we expect the absolute MS revenue decline to be steeper than this growth in 2025. As a reminder, we expect a potential biosimilar entry for TSABR in the US, which we believe could occur sometime in the fourth quarter of this year. As I mentioned a few minutes ago, we have started to see generics for TechFedera enter in Europe, and while we will continue to vigorously defend our IP, we do expect to see further impacts from generics in Europe this year. As I noted earlier, we believe that corporate partner revenue will be roughly consistent when comparing full-year 2025 with full-year 2024. Due to planned maintenance activities and the timing of batch releases, we expect minimal corporate partner revenue in Q4. We believe we are on track to deliver the $1 billion of growth savings and $800 million of net savings under our Fit for Growth initiative. As you can see on the slide, many of our guidance considerations have remained the same as when we guided for the year back in February. I will also refer you to our press release for other important guidance assumptions. And finally, a topic of great interest to many investors is the impact to our business from tariffs. Biogen currently does not expect a material impact in 2025 from potential tariffs as announced by the US administration on April 2nd, 2025, even if the exemption for pharmaceuticals were to be removed. This is based on both a significant portion of US revenue being derived from products which have manufacturing operations in the United States, as well as our current global inventory positions. Our guidance range also considers potential retaliatory tariffs from China as announced. However, the US and international tariff landscape remains uncertain, and our guidance does not contemplate any new tariffs that may be announced in the future. I will also note that when excluding one-time tax impacts, our tax rate is broadly a function of our business mix and therefore does not serve as a good proxy for estimating potential tariff impacts. Biogen's effective tax rate is a reflection of our US market revenues being almost entirely taxable in the US at the full federal plus state tax rates. We also generate a relatively high percentage of our revenue outside the US, which is taxable in those markets and in the US under the guilty regime. We will continue to monitor and analyze the current and future US and reciprocal tariff landscape as it evolves. I'll now pass the call over to Chris for some closing comments.

Thank you, Robin. Again, if I come back to where is Biogen going, you just have to look at our pipeline. We've got another four phase three starts. That's after the phase three start already in AMR. We've got three clinical trial readouts coming. We've got three regulatory decisions coming. One of the other things I'll say is in this first quarter is we did a major restructuring of research and I'm really quite excited about what we're doing there. You know, as an industry, we rely way too much on late stage business development. The most cost effective place to do collaborations is actually pre clinically and we have a goal of signing four to five new research collaborations this year. Just on research, Biogen has been known for breakthrough medicines. In fact, all four products that we launched in 2023 and 2024 are first in class, first ever disease modifying agents. We go after some of the hardest to treat diseases. One of the problems about being breakthrough is that you're in diseases where a lot of the investment committee is not already doing an awful lot of research. If I take AMR, the antibody mediated rejection, for example, there's really no treatment there today. One of the things that I think we feel that we would like to do is do a deeper dive into some of these diseases and pipeline assets, not with the intention of presenting new data, but to just say, okay, what's the competitive landscape? What's Biogen's right to win here? What's the patient journey? What is it going to really take to move the needle on one of these diseases? What's the reimbursement landscape going to be like? What's the epidemiology?

If

I look at AMR, for example, I think this is a huge opportunity for Biogen. We saw 80% resolution of AMR in phase two trials. We have a high level of confidence in that, but of course, a lot of people are interested in IGAN. What's it going to take to really be interested in IGAN? I spent an entire day with our West Coast hub just on Felsartemapp. There's a huge amount of things going on there. Even things like all CD38s are not created equally. What are they like? We would like to invite whoever's interested to come to some of these thematic seminars. The first one we're going to hold on June 11th. Hopefully, that'll be the first of a series. It's just meant to be educational and a deeper dive. We'll have some of our top internal experts here on all of these subjects to answer any and all questions. With that, Kim, I'll turn it back to you for Q&A.

Thanks, Chris. Melinda, can we go to our first question, please?

Certainly, if you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. As a reminder, please limit yourself to one question. If you require any further follow-up, you may press star one again to rejoin the queue. Your first question comes from Brian Abrams with RBC Capital Markets. Please go ahead.

Hey, good morning. Thanks for taking my question. Congrats on the recent LeCkemi approval in Europe. Can you talk about what the rollout strategy could look like there and your sense of what the reimbursement process and amenability could be?

Thanks. Thanks, Brian. Well, that is certainly going to take some time. The fact that the approval took a while tells you that there's an awful lot of thought going into that. One of the things about when you launch a -in-class disease modifying agent is that you're not displacing anything in a budget. These types of products are incremental adds to the total health care budget of countries. That's sometimes where it's easier to launch a product that's a me too, that comes in and can simply cannibalize the budget of another product. This is obviously a significant market in Europe. Europe is an aging continent, even more so than the United States. There are an awful lot of eligible patients. But we'll be taking that with our partners aside market by market. I do think that also LeCkemi has run the gauntlet. There has been a full examination of the efficacy, the safety, but also the economic benefit. As you know, the EMA does take into account some aspects of the economic impact. I think that in some ways this deep interrogation by all of the countries of the European Union, by the way, should actually, if anything, help us as we go into reimbursement because this has been fully examined and fully evaluated. I think it'll still take some time and we'll go to some of the countries will launch clearly faster as is the case generally in Europe.

Thanks, Chris. Let's go to the next question,

please. We go next to Eben Seigerman with BMO Capital Markets.

Hi, all. Thank you so much for taking my question. I want to touch again on LeCkemi, but this time with the subcutaneous formulation, maybe remind us how that potential for at-home administration can help accelerate sales in the United States. We're seeing some good uptake, but I think that that could really help get things going further and maybe some of the hurdles that you have to overcome to really get full penetration there. Thank you.

All right. So the first is subcutaneous for maintenance. And these are patients who have been undergoing bi-weekly infusions now for 18 months. And so I think there are two aspects for the commercial. First is, you know, we are busy focusing on making sure that physicians and patients understand the need to continue on therapy. And there we have long-term extension data and we have demonstrated that in 36 months after treatment, patients are still doing better on treatment than if they stop treatment. So there's the whole establishment of the maintenance market. But if, you know, these are also older patients and it's not always easy to get to in infusion centers. Obviously, we make it easier with once monthly dosing. But our view is that this is going to be more effective as a long-term chronic therapy if you have a patient friendly administration like subcutaneous. So I think as a first step, the subcutaneous really helps establish and extends the treatment life of a patient in maintenance. And then, of course, in the initiation phase, that will be interesting to see. I think in major urban centers, I think we may see that some physicians may want to continue, at least in the first phase. A few months of therapy on infusion because they're timed with the MRIs to monitor aria and then move to subcutaneous. I can imagine in more rural settings where getting to infusion centers is not as easy for patients that the subcutaneous might even be right from the get go. So I think it will depend a little bit on where you are as a patient. But there's no question that, you know, this is again a simplification of the physician's workload. It's a heavy load to think about the PET scans or the lumbar punctures, going to negotiate for use of the infusion beds, which are often considered to be the domain of the oncologist. And, you know, just from a caregiver point of view of bringing the patient to the infusion center, I think this will be welcomed by them as well that they can do this at home. So I think this is an enabler for the patient, but also for the physician.

Melinda, can we go to the next question, please?

We go to Salveen Richter with Goldman Sachs.

Thank you. Good morning. Just following up on Evan's question here. Could you just speak to your thoughts on lekenby uptake and growth on the Ford? Not only with subcutaneous maintenance, dosing in the second half, but also with food years, bios and vitro diagnostic, which should enter the market as well. Thank you.

Yeah, we don't have that much information about the diagnostic. You know, the process to get a diagnostic approved is different, obviously, than a drug. And then the reimbursement situation is also different. I do think the recent report by the Alzheimer's Association highlighted the need for early diagnosis. One of the issues that has, I think, been in Alzheimer's is that patients, most patients are actually seeing their primary care physician and it can take quite a long time for the physician to distinguish, is this just part of the normal aging process? Is this some other form of dementia or is this Alzheimer's? And so two or three years can go by and sometimes even longer before the Alzheimer's diagnostic is done through a referral to a neurologist. Now, one of the things that that Alzheimer's report also pointed out is that there's a real interest in getting treatment earlier. And that, you know, the earlier you can get to a patient before there's been too much neuronal damage or death, the better. And so I think there is a real effort to be done to really get those diagnostics established. And so the benefit really is, I think, twofold. One is, hopefully, we can get patients on treatment at a much earlier stage of their disease. And we believe and there's obviously studies ongoing to actually gain the evidence of that. But even, you know, even the data that we presented at CTAD in 2023 of low TAL patients, which is surrogate for early stage patients, demonstrated that, you know, 60 percent of patients were stable after six months and actually 70 percent. Sorry, 70 percent were stable after six months and 60 percent actually showed some level of improvement. So I think the blood based diagnostics are going to be extremely important. But, you know, again, we have to wait and see where where those companies are in the regulatory process.

We go to the next question, please.

The next question comes from Tim Anderson with Bank of America.

Thank you on the Kimby. How are you seeing the market parsed out between your product and Louise? Because obviously, there's a very big difference in terms of commercial positioning. Around finite goes in and I'm wondering, you know, who's going to kind of win that battle. And Chris, you answered an earlier question, starting off talking about getting docs to keep patients on therapy. So the product you're pricing on the market now for coming up on two and a half years. Are you actually seeing some prescribers take patients off therapy after a period under the idea that once plaque is gone, you no longer need to give drugs?

Yeah, I mean, I think first I would say, you know, we would really consider the launch of this product to have been September of twenty three, because, you know, that's when we had full approval. We had reimbursement from CMS and actual fact, we didn't even really get the question on the reimbursement for PET scans clarified till about November of that year. So I think we're still much earlier in that launch phase to a question on that on this one. So, you know, the question is, what is the difference between the adipose versus dinanumab? You know, it depends on the physician, and I think we're going to see those who like this idea of potentially saying, well, there's there's a finite point to this equally. You know what we have seen even at the recent ADPD, once you have a maintenance indication and you start to see the data, you start to realize that, well, actually, once you've released the remove the plaque, you're not done, because there is some return of the plaque. And and potential damage, so there will be, you know, obviously a lot of education to be done to demonstrate the importance of continuing on that. But I think at the end of the day, it's largely going to be up to the physician and the patient. There will be patients where dinanumab may be the right answer for them. Depends on their fragility, their age, whether they're in a rural setting or an urban setting. And I think the market ultimately just gets split between us and dinanumab. The most important thing for both Lily, I think, and Biogen and Azai is that we start to to to really expand this market there. You know, we've we've got maybe, I don't know, 12,000, 13,000 patients somewhere in there on on on treatment, less for for dinanumab, but they will get there. But, you know, when you consider the number of patients who desperately need treatment, we're still only treating a small fraction. And I think that's really got to be the the focus of all the companies in this space is to really ensure that that that more patients benefit from these disease modifying treatments.

We go to the next question, please, Melinda.

Next up is Chris shot with JP Morgan.

Oh, great. Thanks so much for the question. I just would love a bit more elaboration on on latest thoughts on on business development in terms of the size and scopes of deals you're considering. It's obviously been a pretty volatile market out there, and I'm just wondering if that's changing your views at all or the range of opportunities that might be available to Biogen. Thank you.

Yeah, thanks for that. I mean, I think there is there has been a shift even perhaps in the last, I would say, four to six weeks. You know, in a couple of ways, I mean, valuation is one thing, but you're still really focused on getting the right thing. And what I think has changed is, you know, you have a lot of health care investors who are facing a lot of pressure from LPs. And I think they are looking for liquidity. And and I think we've had a lot of companies who, you know, not really wanted to to to do much because valuations are low. And but we're also finding that there's a lot of companies who are struggling to get financing. So I think if you're looking to acquire, I think there might be a little bit more of an ease in actually getting at least into a discussion. But I think even from a collaboration point of view, you know, I think one of the things we're going to see, and I think this is also where we're doing this in the early research collaborations. I think companies will be able to provide some of the funding as some of the venture capital and some of the other sources of funding dry up for other companies. And so there are opportunities in there. It still requires an awful lot of patience and discipline to work your way through and find companies that work together. I do think Biogen is actually well positioned. One of the things I'm particularly proud of is we have this West Coast hub, which is essentially the high bio team, and we have been able to retain virtually everybody in that high bio team. Jane has hired our head of immunology, came from BMS, who's out there on the West Coast, and we're building out that team. And so I think Biogen, just because of our own biotech roots, is a company that knows how to do collaborations and I think can be a trusted partner in this. So I do think this is an opportunity. But, you know, again, and we look at a lot of things, but, you know, even in this environment, you still have to stay disciplined.

Thanks, Chris. Could we go to the next question, please?

We'll go to Michael Yee with Jefferies.

Thanks. Good morning. I wanted to ask Priya about the early Head 345 study. I know that you've guided to a 2028 readout. Your competitor is also guiding to a readout, although I think there's an assumption that they may come earlier. Can you just talk about maybe one or two points about your positioning versus that study and particularly what would get you extremely confident that that's going to work? And or read out, because I know that you have an interim, but I'm just going to assume you're not going to take that interim. Thank you.

Yes, thanks Mike. So overall, I would say I'd like to start by saying that, you know, with Clarity AD, we established that Lechembi, clears plaque and that translates to clinical benefit. Now, with regards to the pre-symptomatic Alzheimer's disease area, it's a big spectrum. And we believe that a Head 345 is truly positioned to provide a comprehensive understanding and evaluation of how Lechembi can preserve cognition across the full spectrum of pre-symptomatic AD. And the reason for that is that we are testing it in two parallel trials. The first one is a Head 3, which is about 400 subjects. And really by the inclusion criteria are 20 to 40 centiloids of amyloid. And then the other trial is greater than 40 centiloids, which is the Head 445 amyloid levels. And there we're looking at whether it can prevent cognitive decline. So a Head 3 is looking at, can we stop the accumulation of amyloid? Has amyloid PET as the primary endpoint? And then a Head 445 is looking at preventing cognitive decline. And we have a very sensitive clinical endpoint called the PAC-5, along with amyloid and Taubet. I think in contrast, -ALV-3 is really evaluating whether the Nanomap can slow clinical progression in a mixed population. And this is based on their baseline CDR global scores. So a true pre-symptomatic is about 55% and they have included 45% of symptomatic patients. So these studies are actually quite different and we are looking at the entire range of pre-symptomatic patients with varying degrees of amyloid. We do fully enroll. We do expect to read out in 2028. We always reserve the optionality of looking at data earlier or such. We're not commenting on that right now. We are looking at a readout in 2028.

And I think if I could just from a commercial point of view, I do think the AHEAD study will actually answer much more of the question that physicians will be looking to ask. I mean, if you're in pre-symptomatic patients, these are otherwise healthy people, right? And the risk-benefit equation becomes different at that point. And there is ARIA that is associated with both products. So you're going to have to answer the question about the risk-benefit of treating earlier. And at what level of amyloid burden? And I think that's going to be useful because the blood-based diagnostics will tell you that if there is a presence of amyloid, they won't tell you about how much. So at some point, you know, you're sort of say 55. You had a positive blood test. Someone's going to send you for a PET scan to see how much amyloid you have. And let's say you're at 50. Well, you know, are you in a watch and wait mode or do you actually treat? And unless you've actually done the study of looking at the full spectrum of amyloid burden, I'm not sure that physicians are going to feel comfortable about treating. So I do think, I do think actually AHEAD 3 and 4-5 are going to be really landmark studies in Alzheimer's.

Go to the next question, please, Melinda.

We go next to Umar Rafat with Evercore ISI.

Hi, this is Mike DeFiori on for Umar. Thanks so much for taking our question. Again, one on lekembe. Lilly's drug unit did about $21 million of sales in Q1, which is its second full quarter of launch. And this tracks slightly ahead of lekembe sales at the same time point. So my question is, has has Biden and ISI perhaps paved the way for Lilly in terms of opening up health care infrastructure? And maybe perhaps could you could speak to any competitive dynamics at play now that you're roughly 18 months into launch? Thank you.

Well, I think that the answer is probably yes. You know, clearly, you know, there's been a lot of hard work and particularly the IDNs to work through all the treatment pathways and protocols and treatment regimens that are that are needed. And so, you know, then now we're into a question of you know, Lecanomab versus Denanomab in those questions. And as I said earlier, I think, I think there will be cases where physicians are looking at both products. You know, I think it'll be a question of who gets initiated. I don't think we're seeing any switching going on here. So, you know, it's really a question of which one are you going to start on and then stay on. I think the bigger question is, can we actually collectively grow the market? And that's really what's most important. And I don't think we particularly want to get into just trying to duke it out over market share in a relatively still small market. There is there are a lot of patients out there and we are not yet doing a full service to patients who are suffering. And so the more that we can get more centers up and running and better education, the better it will be for patients and actually for both companies.

Chris, let's go to the next one,

please. Next up is Terrence Flynn with Morgan Stanley.

Great. Thanks so much for taking the questions. Obviously, there's been a lot of focus on the FDA under the new administration. And I know you made some comments about, you know, your Dravet program moving into a phase three. So just wondering if you could comment high level, number one, on your interactions with FDA and if there have been any changes to the review teams, things like that, but then also in some of these rare diseases, do you think this FDA is going to be advancing very rapidly and be more favorable to the industry in terms of thinking about maybe surrogate endpoints? Thank you.

Yes, thank you. Overall, I'll just make a high level statement that based on our interactions on review meetings and requests, we're not really seeing any changes at a high level. Currently, we remain on track with our engagements and with regards to Dravet syndrome, I think that, you know, obviously the data that we saw during diligence and, you know, which I spoke to as well today for us, that has been very compelling. That has been, you know, it has several aspects to it. First of all, this population, although it was a small, you know, open label trial, I think what was important about it was that these patients were on standard of care. And unfortunately, the burden of disease is high in Dravet's and they have a number of seizures, sometimes, you know, seven to 10 a week. And they are on multiple medications, antifeasure medications. And in fact, we saw the impact of Zorobu-Nursen on top of standard of care. So the impact that we saw was, you know, 87 percent seizure reduction on top of background standard of care, full standard of care. And then that was durable out to about 76 percent when you look out six months. So that the data was important. But the other aspect to the question that you asked is that Stoke had already engaged with FDA Europe and Japan. So we have regulator input, which we have evaluated carefully. We have agreement on the approach and design to the Phase 3 Emperor trial. So we remain fairly confident that this is the right trial to conduct. And so, you know, we remain encouraged about where we are in our engagement, not only with the FDA, but global regulators and that the design is appropriate to really give us that answer on what we hope will be a disease modifying therapy impact on in this population. But

I think to your broader question, I think certainly right now at Biogen, we have not really seen any delays in our interactions with the FDA. And, you know, I personally am encouraged by some of the more recent comments by the new commissioner about particularly ultra rare and thinking about, you know, surrogate markers and making sure patients get drugs earlier. And, you know, I think he seems to be more interested in innovating some of the process. I think about his statements on reducing the use of animals in studies, for example, and use of AI. So, you know, there's certainly a lot of change going on at the FDA, and we're watching very carefully. And, you know, obviously, it's been some key leaders who have left and some reduction in staff, but they say so far, at least from a Biogen point of view, we haven't seen any adverse effect to that. And perhaps some of the new perspectives of the new commissioner, Macquarie, could actually be helpful to us.

I know it's a busy morning, so maybe we can squeeze one last question in here. Our last question, please.

We go next to Jeff with Citibank.

Great morning, everyone. Thanks for the question for Chris or Robin on manufacturing. You know, Biden has historically had a lot of capacity in the US going back to the original expectations and Alzheimer's. I guess the question is, as we see more companies and biopharma announce plans to, you know, onshore capacity, do you guys view your own capacity or resources differently? I wonder, you know, if there's a short term opportunity to partner that's not in the model. Obviously, all of course depends on what you have in excess. Thank you.

Yeah, we've actually recently our main facility in Soloturn, for example, we've recently there. We're actually doing CDMO business to absorb capacity. Obviously, that doesn't help for someone looking in the US. In RTP, we actually do quite a lot of manufacturing already for third party companies. And I think, you know, even before I joined Biogen, I knew of the reputation of our RTP facility. It's a very high quality, very efficient site. So yes, I think we certainly will be open and looking for opportunities on that front.

Yeah, we have a good mix in both facilities between our own product manufacturing as well as those for partners.

Thanks for your time, everybody. Really appreciate it. And if you've got more questions later today, just reach out to the IR team. Thank you.

This concludes today's conference. We thank you for your participation. You may disconnect at this time.