Biogen Inc.

Please stand by, we're about to begin. Good morning, my name is Jess and I will be your conference operator today.

At this time, I would like to welcome everyone to the Biogen second quarter 2026 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 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, Jess, and good morning, everyone. Welcome to Biogen's second quarter 2026 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 in this call, can be found in the investor section of Biogen.com. We've also posted slides to our website that will be used during the call. On today's call, I'm joined by our President and Chief Executive Officer, Chris Viehbacher, Dr. Priya Singhal, Head of Development, and Robin Kramer, our Chief Financial Officer. Alisha Alaimo, President of North America, will also be available for the Q&A section of the call. We'll make some opening comments and we'll move to Q&A. And to allow us to get through as many questions as possible, we kindly ask that you limit yourself to just one question.

And I'll now turn the call over to Chris. with the goal of achieving sustainable revenue growth.

So if I take the three elements that I think contribute to that is, first is our growth product portfolio. Now, even before we include the products from Pellis, we've seen significant growth. And in fact, our growth portfolio now is greater than our legacy MS portfolio. And that's really been most important recently enhanced by two important achievements. The first is Spinraza high dose, where we've seen across all markets, the first market to be approved was in Japan, then Europe, and now the U.S., and we're starting to see this roll out into more international markets. In all of those markets, this conversion has gone much faster than we expected, and that's an important development for us because this is an extremely competitive market where efficacy matters, and we've seen considerable efficacy benefits come from the high dose of Spinraza. And this is a franchise that we see for the longer term because we've got salinersin coming along behind that. So maintaining market share and in fact what we're seeing is some anecdotal switchbacks particularly from the oral product to Spinraza. It's an important not only for the quarter but important for the franchise longer term. The second major achievement this quarter was really Lekembe iClick. It's the first of its kind Alzheimer's treatment, so now offering home dosing for both initiation and maintenance. I think there's probably two opportunities in particular here, maybe even three. The first is obviously with the biweekly infusion, a number of physicians are thinking carefully about which patients are actually going to be eligible for treatment. If they don't think that the patient can get there on their own or there's not a caregiver who's prepared to take the time to get that patient to the infusion centers, those patients are often not offered treatment. So this should perhaps make it easier for a broader section of patients to become eligible for treatment. We think also that there could be a benefit in maintaining patients longer on therapy. And then finally, we think there's a competitive advantage because the benefit that the competitor has with one's monthly dosing now seems to be much less when you've got a home subcutaneous option for them. The second element of the sustainable growth is our pipeline and we'll come on and talk about that in a few minutes. But then the third element is really Cyphovry and Favelli from the acquisition of Appellus. You know, you've seen strong double digit growth for both the full quarter and year to date for the combined sales of those two products. Now, we're only consolidating the revenue from the 14th of May when we close the transaction. But those products are already contributing significantly to our own growth. And I'll take the opportunity here Just to note that if I think about all of the integrations that I've certainly seen over my career, one of the most important metrics is really how revenue does through this period of turbulence really in organizations. There's an awful lot of uncertainty that comes from these major transactions. And the ability to maintain continuity of revenue is I think the number one measure of the success of an integration. And I think so far that we have seen that. And that's really because this is mostly a U.S. transaction, this is really a credit to Alisha's leadership and her team in really reaching out and making sure that the Appellus team feels great about joining Biogen. And certainly when I talk to the former Appellus, now Biogen employees, one sense is a sense of energy and passion and commitment. So we're very much encouraged by the importance of this acquisition. So the next slide is really again, and Priya's gonna talk a lot more about this, but we've got a growing base and now we've got five registration phase three clinical trial results coming along, obviously two in SLE for lupus, one in CLE for lupus, one for AMR and one which is really from our partner at Stoke in Dravet Syndrome. So those are now within the next four quarters. So these are imminent and could really make a difference to the long-term growth outlook of Biogen. As we talked about before, we're also rebuilding our early stage pipeline. We went three years really without filing an IND. We made some really pretty dramatic moves to overhaul our research organization, how we do research. And the encouraging thing is that I think we are now in a much better place already in our early stage pipeline. Some of that is coming early. We've had three INDs already this year. We've got more to come. You know, we've done a number of key collaborations like Banco Endeavor last year, the acquisition of Raythera this year. also substantially boosts our early stage pipeline. This is really investing today for really what would be products launching in the mid 2030s. But you've got to start today if you want to have that growth tomorrow. And then if I look at this slide, this is a slide we first showed at JPMorgan earlier this year. At that time, he said, look, there are a number of near-term current growth drivers, and you see them with Lekembe and Zerzovay, Bumerity, Spinraza, Skyclaris, and Calzadi. And that is the group of products that now exceed our legacy MS portfolio and grew strongly in the quarter. Now, when you add Cyfovrin and Pavelli, these products already in themselves are enough to help Biogen get back to a growth story. And then when you look at what's coming, we just talked about these imminent data readouts. That's the second wave here, the registrational late stage pipeline. These are all products with significant opportunity. Now, this is also a major shift for Biogen. Three and a half years ago when I came, we really only were visiting the neurologist. We had a few products that we could still promote in MS and we had Spinraza. We are now looking at visiting rheumatologists, dermatologists, nephrologists outside the US and epileptologists and nephrology transplants. So there's been a significant growth in the breadth of our portfolio. That's exciting, but it also means that really Now we are shifting to not just growing the substrate of growth, but now executing on that growth story. So there's, there's a lot going on inside the company to make sure that all of those launches are a success. But, you know, we're also keeping an eye on the longer term. And that's that third wave, the opportunities for longer term growth. Dear nursing and seeing the data on that very promising new modality in Alzheimer's, not necessarily part of the The equity story near term, but longer term, this could significantly contribute to Biogen's growth. This is where this renewed early stage pipeline that I just talked about is so important in the research portfolio. From a BD M&A point of view, I think we have what we need to grow near term. I think we'll be less intentional about M&A and perhaps more opportunistic. But we'll be certainly intentional about the earlier stage development. I mean, ideally, we'd like to be bringing in assets between development candidate and IMD stage. And so when you look at, you know, what is the opportunity, and these are not revenue forecasts, but really, you know, an initial sense of what's the addressable market that come from the pipeline, and I would say we're still doing work. We've got Lupus here as a potential $8 billion market. The MS market is over $20 billion. I think we're not there yet in terms of being able to really say how we access that. It's probably a $2 to $3 billion market today, but there's no real reason why this market shouldn't be the size of MS. But even if you just say the $8 billion, that's a significant opportunity for us to go after and Obviously, not only with SLE, but we would hope to be the first product to be approved for CLE. Then you got AMR, approximately 11,000 patients just in the US alone. Phase III data coming in early 2027. That's at least a $2 billion addressable market here. It depends on which pricing you're using, but when you see the pricing that is now occurring in IGAN, that is going to have a spillover effect on AMR. And then when you think about microvascular inflammation, which is another indication we're pursuing, that market could also grow. And of course, then later on, we've got IGAN and PMN data coming for pelsartemab. And then Dravet syndrome, as you know, we have the ex-US rights, but even in ex-US markets, there are about 7,000 patients in Europe alone. And when you add up all of our key biogen territories, You know, that's at least a $2 billion opportunity. Again, you know, we're busy working on that. We're still, in some ways, 18 to 24 months from launch on those things and continuing to work. But this shows the potential. It also shows why we have to execute with excellence. And we're busy investing today to make sure those launches are a success. And so I go to the last slide. If you looked at Biogen pre the Appellus announcement, consensus of investors was that Biogen was going to be roughly flat through 2030. I think we're already seeing that consensus start to shift because people start to appreciate the Appellus transaction. But the way we certainly see it is when you take the Appellus marketed products and you add them to our own growth product portfolio, You know, I think we're seeing a growing picture. And when you now then take the late stage registration pipeline, you know, I can remember vividly one investor in a meeting that we had just after we had announced the palace saying, you know, I get it. The late stage pipeline now comes on top of a growing basis instead of a stable basis. And I think this slide neatly encapsulates really the strategy to return to sustainable revenue growth. And with that, turn it to Priya, who can talk a little bit more about that late stage registration pipeline.

Thank you, Chris. And good morning, everyone. As we deliver the new Biogen, a large part of our transformation and near term opportunity for growth comes from our late stage pipeline, as Chris mentioned. And I am excited about this future. That is because today We have one of the strongest and most diversified late-stage pipelines in Biogen's history, with multiple near-term opportunities to create value in the upcoming years. We shared this slide with you at the beginning of the year, and today you can see that we are delivering on the opportunities we outlined, including the FDA approval of iCLIC initiation, which is an important innovation for patients and caregivers. Beyond iCLIC, Biogen and ASI presented new data at AAIC earlier this month. This included real-world evidence supporting the long-term benefits of continuous Lecambi treatment. We also shared new data for Dirinersen, establishing proof of concept in Alzheimer's disease, and we are now focused on developing the next steps for the program. and more broadly, we continue to demonstrate medical leadership across our portfolio with important new data presentations for both falzadumab and zorvanircin. While these milestones reinforce the potential of our portfolio today, what makes this period particularly exciting is what lies ahead in the near term. We are now entering a multi-year registrational cycle beginning with SLE data by the end of this year and followed by multiple catalysts extending through the remainder of the decade. And while we remain focused on advancing our high conviction, late stage opportunities, in parallel, we continue to invest in the next wave of innovation. The progress we have made this quarter has meaningfully accelerated the transformation of our pre-proof-of-concept pipeline. At this point in the year, we are also now beyond our high-risk, high-reward readouts, as we mentioned at the outset. This includes our Phase II BTK inhibitor, BIB91, where we achieved proof-of-concept in relapsing remitting MS. And in line with our disciplined approach in how we advance assets, we are evaluating next steps given the increasingly competitive nature of that market. As we rebuild our early-stage pipeline, we expect to add six new programs this year, including new Phase II proof-of-concept studies to broaden the potential of talzadumab and Empovely in autoimmune disease, as well as first-in-human studies from our internal pipeline and the lead asset from the pending Raythera acquisition, which is now already in phase one. Overall, we believe these investments are building a durable innovation engine with the promise of delivering sustainable long-term growth and value creation. So as we step back and look across the next several quarters, we expect readouts from five registrational studies across four important indications, SLE, CLE, AMR, and Dravet syndrome. And reflecting the strong execution of our teams and enrollment momentum, we have also accelerated the expected Phase III readouts for talzadumab in AMR and litofilumab in CLE with data now expected in the first half of 2027. Later this fall, we also look forward to presenting new 52-week data from the Phase 2 portion of the ongoing amethyst study at the EADV Annual Conference, which we believe will provide important insights into the durability of response for litophilumab in CLE. Taken together, these milestones are expected to generate important data over the next several months that has the potential to shape our next phase of growth. In summary, the strategic decisions and investments we have made over the past three to four years have positioned us to deliver near-term readouts while advancing long-term innovation. And we look forward to continuing to share our progress with you. With that, I would now like to turn the call over to Robin, who will provide a financial update for the quarter. Thank you.

Thank you, Priya. Good morning, everyone. I'm pleased to be speaking with all of you today following a strong revenue performance in the second quarter. Total second quarter core pharmaceutical revenue was $1.8 billion, up 4% year over year and 12% quarter over quarter. This performance was driven by our growth portfolio, which generated over a billion dollars of revenue in the quarter, up 24% year over year, and 25% quarter-over-quarter. The Biogen standalone growth products, excluding our Apellis, Sifovri and Ampavelli revenue, was $933 million, up 9% year-over-year and 10% quarter-over-quarter, and as Chris noted, generating revenue in excess of our legacy MS portfolio again this quarter. Our growth portfolio has been further strengthened with the addition of Cyphovry and Empaveli from the Apellis transaction, which generated $128 million in combined revenue to the period post the May 14th acquisition date. This quarter's results demonstrate strong commercial execution and the significant progress we've made in our portfolio transition. Let me now take you through some key highlights from our core pharmaceutical product performance in the second quarter. First, for the growth portfolio. Spinraza revenue was $402 million, up 2% year over year and 7% quarter over quarter. This was driven by both demand and stocking for the high-dose regimen in the US, partially offset by shipment timing in certain ex-US markets. High-dose Spinraza was approved in the US in March The EU in January and Japan last year. During the period of patient transition to the high dose regimen, we benefit from revenue associated with the one time transition dose. Spinraza high dose maintenance is priced at parity with Spinraza. We are pleased that the pace of conversion to high dose has been going well and enthusiasm from the patient and prescriber communities for a higher efficacy option has been strong. We also believe this is encouraging for the opportunity for our Registrational Pipeline asset, Salonursen, which has recently received Breakthrough Therapy designation. Femerity revenue of $197 million was down 7% year over year, partly driven by inventory dynamics, and up 10% quarter over quarter. Revenue for the first half of 2026 was up 7% versus the comparable period in the prior year. Lakembi in-market revenue was $184 million, up 15% year-over-year and 9% quarter-over-quarter. We saw a continuation of market growth in key markets, including the U.S., Japan, and China. And as Priya mentioned, we are pleased to have received FDA approval for iCLIC initiation earlier this month. Skyclarus saw patient demand growth both in the U.S. and ex-U.S. in the second quarter. with revenue of $168 million, representing 29% growth year-over-year and 11% quarter-over-quarter. SkyClarus is now available in 36 countries, and we continue to expect SkyClarus growth to come largely from XUS as we advance the launch. Zerzuvae continue to show strong underlying demand growth with revenue of $71 million, and we're also pleased to announce that Zerzuve is now launched in Germany. For the MS portfolio, I would like to highlight that Tasabri continued to demonstrate resilience and demand in the midst of a biosimilar launch in the US and Europe. Second quarter revenue of $451 million was down 1% year over year and up 2% quarter over quarter. We've invested for a long time to establish Tasabri as an important option for MS patients and we're pleased to see this reflected in the resilience of Tasabri thus far. Turning now to an update on the Appellus acquisition, which closed mid-quarter on May 14th. The integration is progressing well and both Cyphovry and Ampavelli had strong performance in the quarter. Cyphovry continued to demonstrate market leadership with total revenue in the quarter of $162 million, up 8% year over year and quarter over quarter. with total commercial injections up 13% year over year. Empaveli continues to launch in C3G and primary ICMPGN with total revenue of $46 million up 123% year over year and 12% quarter over quarter. The Apellis acquisition accelerates our return to growth. It adds two best in class commercialized medicines to our growth portfolio. which we expect to contribute materially to our top line growth in the near and long term. We expect Sifovri and Empaveli on a combined basis to grow in the mid to high teens through at least 2028. In addition, we expect this transaction to materially increase our non-GAAP diluted EPS CAGR through the end of this decade. We expect approximately $120 to $130 million of impact to our other income expense line in both 2026 and 2027 associated with interest expense and foregone interest income associated with financing the transaction. We expect to generate at least $250 million of run rate synergies by the end of 2027, largely from optimization of general and administrative expenses and research and development. For 2026, we expect approximately 85 cents of non-GAAP EPS dilution, primarily from financing costs associated with the transaction. We expect the transaction to be accretive to non-GAAP diluted EPS in 2027. We believe this transaction represents an attractive use of capital that will further bolster both our top line and bottom line growth prospects and therapeutic areas aligned to our immunology and rare disease strategy. Moving on to the financial highlights. Total revenue for the quarter was $2.7 billion, up 3% year over year. Revenue from the anti-CD20 royalties and profit share, included in other revenue, was $514 million, up 10% year over year. This increase was driven by royalties from Okravis, which benefited from the recent subcutaneous launch, and resilience from Metuxin in the U.S. In addition to the revenue contribution in the quarter from Syphovry and Empevelli as previously discussed, our results of operations for the second quarter of 2026 include a half a quarter of operating expenses and financing costs associated with the acquisition of Appellus. Non-GAAP cost of sales as a percentage of revenue was 22% in Q2 2026 versus 21% last year. The increase was primarily due to product mix. largely from increased contract manufacturing revenue. GAAP cost of sales as a percentage of revenue was also impacted by higher amortization costs associated with the acquired inventory, fair value step-up adjustment for SkyClarus from the Ariadne transaction and Cybovry and Empaveli from the Apellis transaction. Non-GAAP core OpEx or combined R&D and SG&A expense increased 20% year over year This reflects approximately $95 million of APELIS operating expenses from the May 14th acquisition date through the end of the quarter. For R&D, it also reflects our investments in our Phase III clinical programs, including Felzardimab's indication in MBI and Selenersen, which were advanced as registrational studies in the second half of 2025, and Lidofilumab, where we expect the Phase III SLE data later this year including a $25 million year-over-year decrease in R&D funding from the Royalty Pharma funding for lidophilumab. For sales and marketing, it reflects support of our U.S. and international product launches and investments in prelaunch activities for our late-stage high conviction pipeline. As we previously announced, we've recorded $164 million of acquired IPR&D and milestone charges associated with our investments in the development pipeline in the second quarter of 2026, including a $100 million upfront to TJBio associated with the acquisition of the Felzartamab rights in China, giving us worldwide rights to Felzartamab, a milestone payment of $45 million to Ionis in connection with the initiation of the Phase III trial for salinersin and SMA, and an upfront payment of $15 million to Ionis to opt in to bid 147 in broad ALS. Now turning to cash flow and the balance sheet. We continue to generate strong cash flow with $408 million of free cash flow generated in the second quarter. We exited the quarter with $1.3 billion of cash and $6.8 billion of net debt. We closed the appellate transaction in the second quarter, which was funded with $3.6 billion of cash from the balance sheet and $2 billion of term loans. During Q2, we repaid $200 million of the term loans and continue to expect to repay the remainder of the term loans by the end of 2027. Turning now to guidance. Based on the expected revenue performance of our base business, including our products and TSABRI, Our guidance update reflects a $0.60 increase in the underlying business guidance as compared to our previous guidance. We are pleased to be increasing our total revenue guidance from a mid-single-digit percentage decrease to a mid-single-digit percentage increase. This reflects both the expected performance of our growth products into Sarbury as well as the addition of Syphovry and Epivelli into our product portfolio. Our guidance also reflects updates to core operating expenses other income and expense, and our full year tax rates, primarily to incorporate the impact of the acquisition of Apellas. We expect our core operating expenses in the second half of 2026 to be between $2.65 billion and $2.7 billion. Our guidance also reflects updates associated with our strategic investments in the early and late stage pipeline, as well as those associated with our near and midterm growth. It incorporates transactions that have been executed and our current expectations of those that will occur for the remainder of the year. It incorporates approximately a $3 non-GAAP diluted EPS impact of charges associated with IPR&D and milestones including the Q2TJ biotransaction, the Ionis milestone associated with achieving the first patient dosed in Stellar 1, our pivotal phase 3 cellular nursing study and SMA, and the pending Raythera transaction associated with the addition of a Phase I immunology asset into the early-stage pipeline, which is expected to close in Q3, and the expected full-year 2026 85-cent dilution associated with the APELS transaction, again, largely driven by the impact of financing costs. Our updated 2026 full-year non-GAAP diluted EPS range is now between $12 and $13. Please be sure to review this slide as well as slide 25 in the appendix of this presentation and our press release for other important full-year 2026 guidance assumptions. In closing, strong commercial execution in the Biogen-based business and the addition of Cyphovere and Ampavelli resulted in strong top-line performance in Q2, and the completion of the APELIS acquisition accelerates our near- and mid-term top-line and bottom-line growth potential. With that, I would like to pass the call back to Tim to open us up for questions.

Thanks, Robin. Jess, could we go to our first question, please?

Certainly. If you would like to ask a question, please press star 1 on your telephone keypad. As a reminder, please limit yourself to one question. If you require any further follow-up, you may press star 1 again to rejoin the queue. Your first question comes from the line of Chris Shaw with JP Morgan.

Great, sorry, on mute again.

Just a quick question for me on HD Spinraza. Just elaborate a little bit more on how the ramp is coming here compared to internal expectations and just any metrics you can share on the conversion you're seeing in some of the markets where the product has been launched for longer. Maybe also as part of that answer, can you talk about how meaningful is the impact from patients switching back to HD to overall volumes for the product as well. I'm just trying to get just a general sense of just how this is progressing and impacting the franchise. Thank you.

Hi, Chris. This is Alicia. I'll take that question. So if you really think about Spinraza, it's almost a decade after introducing the first SMA treatment. What I think you're seeing is Spinraza still setting the bar on efficacy in the space. and also if you think about how did Spinraz HD even come about this was from several years ago we had many patients come forward to Biogen saying you know we just wish we had more we wish we had more we feel like we could take an even higher dose and then obviously Biogen went in and and developed this this new formulation and here we have high dose today so now that we've We are seeing basically the demand and the urgency really being driven by this patient community. In fact, if you think about metrics, Spinraza high dose is exceeding the original launch of Spinraza in both start forms and grads in the first 13 weeks of launch. And we are growing every single week. So when you look at the Q2 revenue, sites are ordering high dose to prepare for each patient's next dose. and when you think about the dosing of the product, you do have to wait a quarter or two depending on when you had your last dose of Spinraza. The feedback from patients so far that have received the product has been quite positive, also from the physicians quite positive. So the teams are really supporting the payer approvals and the account P&T reviews and patient transitions. Now in this initial bolus of launch demand, You are seeing that the majority of the patients are transitioning from spin 12 megs to high dose. However, we also have several patients who are either new to Spinraza and particularly babies. You know, we hadn't dosed a baby in years. And so we are seeing babies now getting dosed. And also we have had several switchbacks from Evrizdi. So we think for this year, what you're going to see is the bolus of the transitions along into the beginning of next year. But our big focus for 2027 is going to be on new starts and on switchbacks. One of the advantages that you have that we didn't realize was going to be such a positive in the market is with the spin 12 megs, there are four loading doses. With high dose, there's only two. And we do have patients who are more willing to do the two as the loading dose than the four. and that is where you're seeing also some of the switchbacks and mutation starts.

Yeah, and just the U.S. is actually one of the last countries to launch actually unusually. So Japan, where we launched earlier as in Europe, that's where actually we're seeing, particularly Germany, seeing a reversal of the trend of switching to oral therapy and some trending back. Now, you know, I think it's still early days and as Alisha said, it's largely first. people moving from the lower dose to the high dose. But again, as Alicia said, in all markets, and I go talk to physicians around the world when I'm visiting our affiliates, at the end of the day, it's really in these devastating diseases efficacy that really matters. And there is an enhanced opportunity here for that.

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

We'll go next to Uma Ruffett with Evercore.

Hi, guys. Thanks for taking my question. I guess I want to touch up on expectations ahead of your lupus readouts this fall. And specifically, we've seen Benlista track at sort of mid-teens separation on SRI. We've seen Cefnello from AstraZeneca track at something in the 20s. I guess based on all the work you guys have done, what separation versus placebo would constitute something that's considered very clinically meaningful and differentiated over what's out there in the marketplace right now? Priya, could you also just remind us what dose of your BTK inhibitor is going forward? I'm just trying to think about the liver implications, but I would love to know what the dose is. Thank you.

Thanks. This is Priya. I'll take that. So I think just stepping back, we're really excited about our TOPAZ trials. This is TOPAZ 1 and 2. We will have results from both of these in Q4 this year. These are our SLE trials. So maybe just stepping back, I'll just comment on the fact that we've taken all the learnings from the prior trials to really ensure that we set these trials up appropriately. And by that, I mean we focused on the high placebo responses that you've seen in past trials. Our trials have had rules to limit standard of care utilization. By that, I mean NSAIDs, corticosteroid tapers, handling data for responders and non-responders, but we've also stepped up to really think about the fact that this is a heterogeneous disease. So how do we control for patient and participant heterogeneity? And we have tried to model our inclusion-exclusion criteria to be really quite tracked very closely to Phase II Lilac proof of concept. Now, with regards to what we expect, I think we remain confident in our trial design, site selection, patient selection, really to get a very robust response. We'll see how we kind of perform in the trial, and we'll wait for the results, so I won't speculate. Our primary endpoint is SRI-4. However, we have a key secondary endpoint in Bickler, and we have multiple patient-reported outcomes. So we'll really be looking at the totality of the data, including interferon signature and all of that. I'll also remind us that from a MOA perspective, we think that litofilumab is truly differentiated. Yes, it affects the interferon pathway, but it also affects chemokines and cytokines. And we think this is what's going to provide really the overall benefit. And then, of course, CLE, we expect data next year, and we'll be presenting 52-week data at EADV this fall. So we remain confident in that data set as well. Now moving to your second question on the BTK inhibitor, we haven't actually disclosed doses, so I won't be sharing much more information. And we're looking at what the next steps might be for this.

You know, if you want to add anything, Alisha, in the market research, because I think this is one of those ones where it's no one thing that's going to be a marker of success. You've got steroid sparing. One of the things that we consistently hear from patients is fatigue. and yet you can't really build fatigue into an endpoint in clinical trials as easily. So real-world evidence will play a role, but maybe you can say a few words on what it's going to take commercially to succeed.

Thank you, Chris. Hi, Umar. Nice to hear from you. First of all, we have now recruited several senior leaders with lupus experience, an entire medical team with lupus experience, and several marketers with lupus experience. and I have to say we've probably gotten more insights from them than the actual market research that you can get that, you know, through third parties. And I have to say that, you know, we talk about things like SRI-4 and endpoints, but when you really look at a physician and a patient and interactions they have, what we're finding in this market is there is a huge disconnect on what they expect from treatment. Doctors want to run a patient's experience just by what they see in labs and patients will come in and say, The three things that are really bothering me are fatigue, brain fog, and joint pain. And I do believe in this market, when you look at CLE, where there's only less than 5% of CLE patients receiving an advanced therapy, and I also, because there is no approved therapy, think the CLE patient numbers are under-called. I know that we've reported out 75,000. I think that that is a much lower number than is actually out there. Secondarily, you're seeing that patients are getting lost in the system. being transferred from derm to room and room to derm where no one really knows how to treat them. And then with the treatments that are on market as of today, you know, there are downfalls. One, you know, does not work very quickly or very well and another has an infection safety issue. And so when you speak to these physicians, they are really looking for a treatment that can work much more quickly. and can work in both CLE and SLE. So I think that there's a very long runway for this therapeutic area. And because there is such a huge unmet need and these patients are known, we can track them in the system because most of them are diagnosed. We know which physicians they've been diagnosed by and who they see. I think that even though there is a lot of work to do, I find this to be a very, very good therapeutic area to enter.

The next question, please, Jess.

We'll go next to Mark Goodwin with LeeRank Partners.

Yeah, can you give us a little more insight on syphovry and just what is happening behind the scenes, like new patient starts or just the durability of patients? And we understand that the injections were up 13%, but just trying to understand what's going on there and what kind of growth we should be expecting from here. Thanks.

Thank you for the question. There is a lot going on with Cyphovry since we've been able to integrate them into the organization. First, I want to say I'm very much impressed and very grateful for the level of talent and expertise that joined from the Cyphovry team. I think the first thing that we have noticed with both Cyphovry and EpiValley is when they came on board, the company both used very similar launch plans. And I think the one thing that we've really learned over the last seven years with our seven launches is that We really tailor make our launch plans. We really build them from the ground up. We launch very much informed and it's not templated. And so what we've been able to do is work with the Cyphovry team on across the board, understanding what's really, you know, driving sales, where can we maybe reallocate capital and how do we get the Biogen machine, you know, to sort of help drive some of their momentum. And so I'm very encouraged by the strongest quarter since really launch for Cyphovry and in the month of June, the month of June was the best month in the brand's history. And so what we're really seeing is the quality of growth across a number of areas. I think number one, you're seeing our free drug has been lowered by half. We did end up looking at free drug programs and looking at where we put some guardrails in place to make sure really only the patients that need access to free drug do get it. And that has dropped by half. That's been part of momentum. Secondly, if you look at where this brand started on sentiment across HCPs for slowing the progression of GA and where physicians are today, the SIFOvary team has done a truly tremendous job on changing that sentiment. And because sentiment has improved so much, that is where you're seeing new writers coming on board. It's also where you're seeing many more patients coming on board. So they grew both in patient numbers and in physicians who are prescribing. and I think that one of the tailwinds on that was the long-term five-year data that they've been presenting which is really a lot of education around the progression of GA. And specifically when you look ahead, the market's only 50% of the retina specialists are treating and only 20% of these patients are diagnosed and so the team is really looking at a couple things. One is the direct-to-consumer. We have decided to shut down a few programs. We're reallocating to a new commercial. I think maybe the Sifovri team and leadership thought their DTC came out a little too soon. Now that we think that the market is ready, we do plan on launching a DTC campaign that we believe will be very effective. Secondly, pre-filled syringe. We do look forward to that launch as well. Pre-filled syringe is going to really support the workflow for physicians. We believe it will make it much faster for them, much more efficient, and they probably will be able to get more injections into the eyes with saving them approximately 15 minutes with these injections, so that's also great. But more importantly, on a previous call, I think I had mentioned to you when we were looking at Sifovir, one of the things we had seen in our diligence is that there really was a big discount, a lot of patients discount after a year. Well, now that the team is on board and we've really looked at the data, we've noticed that actually the discons happen after the first injection. That's where the big bolus comes from, even though it really only shows up in the numbers after a year where you see the 50% drop off. And we now believe, due to all of the brands that we've had, where we've had discons issues after either the first injection or first IV infusion, we know exactly what to do for that. So we are also rallying the team around how we support educating those patients and physicians on why they do not need to discon after the first injection, what kind of education needs to happen in the doctor's office. So right now, we believe the HCP growth is trending in the right direction. We believe we will keep up that momentum, and then our focus is going to turn to educating the patients and activating them with DTC.

Thanks, Alisha. Let's go to the next question, please.

We'll go next to Salvin Richter with Goldman Sachs.

Thank you. Good morning. I'm just circling back on your BTK inhibitor, BIB091. Could you just speak to how you expect this asset to be differentiated versus the later stage assets under development and how you're thinking about the safety profile given what's been seen? Thank you.

Thank you, Salveen. This is Priya. So just stepping back, you know, we took BIB91, which is a peripheral BTK inhibitor, non-covalent. into a phase two trial in RRMS a few years ago. And now we've concluded the trial and what we see is that it could have compelling efficacy in RRMS. But actually, as I mentioned in my remarks, we are looking at what is the appropriate next step. Because we see RRMS as a very crowded competitive market. But we're also looking at the external inflections that we've seen in the BTK landscape. So we will communicate more about how we see this asset progressing further. And we haven't actually made a decision to specifically advance it into an indication. So we're not there yet. We're still evaluating the data. Overall, we see that it could perform really well in our RMS. But I think it's another very important example of how we prioritize assets in our portfolio, where we look at the scientific data, but we marry it up with the value and the opportunity in terms of totality and really capital allocation. So this is an example of where we're taking a pause, we're looking at the data, and we will assess how and when and if we would advance it beyond where it is today. I hope that helps.

Thanks, Priya. Let's go to the next question, please, Jess.

We will go next to Michael Yee with UBS.

Thanks. Our question actually is going back to letafilumab in CLE. Do you believe that CLE is a higher probability given perhaps less heterogeneity of the patient population? You've already sort of talked about some of the risks in SLE and heterogeneity and placebo rates. So could you just comment about your view of CLE versus SLE and perhaps some of the data you might be getting at EADV that could help drive more confidence in that because I think there's some additional data presentation coming up. Thanks.

Thank you. I think stepping back, I actually don't see a difference in terms of probability of success between SLE and CLE. I remain confident in really the data that we saw from our LILAC phase two trial, which we believe was a compelling proof of concept trial. And it was important because we tested the SLE population. However, it was enriched for where we believe lidophenamab will have the strongest actions based on its mechanism of action. So we have focused our SLE trial to be quite specific to patients who have skin and joint involvement. And that is why I think I remain confident in how we've set this trial up and probability of success. Similarly, with CLE, I also remain confident because of the focus on the skin and the data that we've generated so far. It just happens to be the situation that for SLE, given the broad indication, and it's a very unfortunately prevalent disease, We have two phase three trials. And then with CLE, we have a phase two, phase three trial. And that was a seamless trial, the amethyst trial. So you may remember that we actually have the opportunity to share phase two data. It is not because we are more or less confident that we're sharing it. We have the opportunity to look at the phase two data by itself without disrupting the phase three portion. and we're just simply taking that data forward and bringing it to EADV. We've already shared the phase two randomized control part of amethyst earlier this year. So now we're sharing the 52 week data, which hopefully will say more about durability of response. But no, I think we remain confident in all three trials. And then as was mentioned, we think this is really highly undertreated you know very few biologics have made it and they haven't really penetrated the market and we think that is actually related to their treatment response and we think you know with the right mechanism of action we really have a very we would be we could meet a very high unmet need in this area.

Go to the next question please.

We'll go next to David Amselin with Piper Sandler.

Hey, thanks. So on impavily, noticed you are initiating a phase two in FHGS. Wondering broadly how wide of a development net you're going to cast regarding the molecule just given its complement C3 inhibition and how you're thinking about other indications potentially beyond FHGS. And then secondly, if you can comment on your anti-CD40 that's phase one ready. and maybe comment on how it's different mechanistically than the CD40 ligand antagonist that Amgen is running phase three program in sorghans. Thank you.

Thank you. Maybe I'll start with Emperbelly there. So I think we remain excited about the fact that we've brought in Emperbelly and of course its nephrology indications as well as the paroxysmal Nocturnal Hemoglobinuria remain very important commercial indications. But as we've been, you know, we brought this in, our legacy of Pellis team was already working up a lot of indications and we looked at these and there were two important nephrology trials that they were considering. One was delayed graft function, which we have paused and we would not be continuing that. But the FSGS we believe remains a really important And the reason for this is that we believe it's a high unmet need. It does have clarity on primary endpoint and a regulatory pathway, as well as the ability of EmperBelly to really address the C3, C3B cleavage pathway and thereby impact the autoantibodies. And we have real-world data, but also murine models where we've seen elevated levels of C3. So we believe this really is a science forward approach, and we are being very prudent. We're taking this forward as a phase two proof of concept, and we could have data really in short order once we initiate the trial. We also already have sought, I think our Emple Valley legacy team has already sought FDA feedback. So this really comes with a really nice package, which we believe is worth prosecuting. So that's where we are. We will be looking across really where does complement specifically C3 have a large role in disease. But the other part, as I mentioned in the other example just a short while ago, is really the value proposition. So we are always looking at the addressable market. For example, with this FSGS, we know there's about 27,000 patients in the U.S. We know there's four types. We will be running a very clear and decision enabling trial to really give us next steps. Now, with regards shifting to your second question about the anti-CD40, we remain excited about the pathway. We think it's differentiated and it could be something that we bring forward also in autoimmune disease. We haven't shared that yet, but we will be communicating more when the time is right.

Thanks, Priya. Jess, could we go to the next question, please?

We'll go next to Alex Hammond with Wolf Research.

Hey, guys. Thanks for taking the question. So, it's been a few weeks since you posted or presented the full CELIA data at AAIC. I guess given it's been some time for you to digest reactions from the medical and regulatory community, what feedback have you been getting? Has there been any feedback that's kind of shifted your thinking at all in the phase three trial design, particularly the potential for early combination with A-beta antibodies? Thank you.

Yeah, I'll take that one. And, you know, as I said in my remarks, deer nursing is really part of the longer term story of Biogen. And, you know, the phase two was really an exploratory study. And the main, you know, objective was really to see if you reduce tau, could you remove cognition? Because up until now, tau has been a theory. It's been a favorite theory, but it's still a theory. And this is the first time anybody's shown any data on this. Now, the business decision really to go forward with that is Priya had already, when we got the data, arranged for an independent biostatistician to review the data. We had an outside ex-KME review the data before we announced it. Then multiple advisory groups, we had the AAIC One of the very strong feedbacks is the signal is real. This is not due to chance. You know, a lot of people got there doing a lot of over analysis of the dosing question. There's a lot of different hypotheses. There's one. It's very clear that tau is important to neurotransmission. And so while too much is not good, maybe too little is also not good. We just don't know. This is the issue of being in breakthrough. It's very exciting, but it's also one of the reasons we decided not to build the company on this type of product. This is one of these high risk, high reward. We're doing a lot of investigation and discussion with the neurology community. And obviously, we'll be consulting with the FDA. We also have long term extension data that are coming along, and we'll make those available. But this is a long term investment. We're confident in the signal. and it could be an exciting option, but still going to have to go through phase three and it's not something that's going to affect Biogen's growth over the rest of this decade. So that's all we really want to say about Deere and Nersen at this stage.

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

We'll go next to Brian Abrahams with RBC Capital Market.

Hey, good morning. Congrats on a solid quarter. Thanks for taking my question. On Sub-Q Lkembe induction, just curious what the initial demand or interest has looked like on the ground here versus your expectations and then your latest views on the access dynamics and potential timelines there. Thanks.

Hi, thank you. I'll take that question. As you know, earlier this month, we received approval for Lkembe iClick for induction. and it will be available by the end of August in market. So what we've done is our field teams are trained. We are educating the HCPs and letting them know availability is expected next month. So we've already had some demand. Of course, it's not getting filled yet, but they are put into a queue. And so we've had, we know as of yesterday, several physicians have already written scripts. And so we're not really counting that yet in our expectations until the product is actually readily available for the market. So we're keeping a close eye on that. Now, as you also know, ASI is trying to make access very easy for this and as simple as possible. And they are the ones working with the payers on Part D access. And so we will find out again in several months what kind of access we'll receive at the beginning of next year. However, even if some of the Part D plans don't contract, The other route which they've been going through with iClick maintenance has been medical exceptions. Now, when we pull the data to look at the medical exception rate for the product, it is quite high, higher than most other therapeutic areas. And so even when a physician does put that through, the grant approval rate is high, meaning that they are getting the product for the patient. And so it remains to be seen what happens as of 1-1 next year. for the coverage, which by the way, even if you get a Part D plan coverage, a prior auth must be filled out. So a doctor's either filling out a prior auth or filling out a medical exception form for the product. So we also believe that based on the market research that we have done recently, iClick will evolve this market and will be another contributor to growth once it gets off the ground. Now keep in mind a lot of the protocols for Lekembe are written for IV and so a lot of the IDNs and hospitals and systems are starting to rewrite those to incorporate iClick obviously also into their workflow. And we also see that, and Chris had mentioned earlier, when you look at drop-off rates, which you know there's drop-offs at many points in a patient journey, but one particularly is when they finally get to a physician who believes in AATs and goes to prescribe the product, one of the largest drop-offs are patients not wanting to take IV in general. That is agnostic of Lekembe or of Kusunla. We also believe in our market research. It shows that those patients would opt on to doing sub-Q. And so there is a big portion of patients that drop off exactly for that reason. And so we believe that that will also help accelerate the market.

Go to our next question, please, Jess.

We'll go next to Paul Matias with Stifel.

Great. Good morning. Thanks for taking my question. How are you guys thinking about the brain shuttle space right now? And as you think about yourselves investing so much in building this Alzheimer's market, do you feel like Biogen needs to have a brain shuttle to capture what the peak sales potential of A-betas is going to look like? And if so, what's the best way to get there? Thank you.

Thanks. It's a very important area for us and has been for a while, perceived any data readouts that we've had recently. So that's what I can tell you. We are working internally. We're also looking externally, and we've been doing the work on shuttle delivery really deeply here. So we remain very interested in getting to tissue delivery modalities, and I think we would think about that across several targets. That's what I can share, but it's a high priority for us.

Yeah, I mean, longer term, you know, Alzheimer's is certainly going to be a core part of the portfolio of Biogen, particularly now that, you know, there's a very good chance that deer inertia ultimately makes it to market. Clearly, we have to go through the phase three program. But again, you know, I think What really is important for this market, and you talk to physicians to actually treat patients, it's really moving cognition. So that's what has caused us to go forward with Deere Inursin. Now, then it probably makes sense to have a portfolio of products. And, you know, we're already even talking internally and we haven't made any decisions yet, but are you going to combine an A-beta with an anti-tau, for example? there's a question of well maybe you don't even need to take after you do say three four injections of anti-tau maybe you need that just an anti-beta anti-a-beta to to actually keep the the tau from from coming back but all of those things are kind of what we're war gaming this would be something that certainly would affect the business in in the next decade but I think if we're going to be in Alzheimer's we we are certainly looking to have a portfolio and and clearly Brain Shuttles would be the next generation of products to pursue. And as Priya said, we've been working on that for several years now.

Thanks Chris. We might be trying to squeeze two last ones in. Can we go to the next one please, Jess?

Certainly. We'll go next to Evan Siegerman with BMO Capital Markets.

Hi guys. Thank you so much for taking my question. I think Chris, you had mentioned could be a $2 billion opportunity. That's really not reflected in current valuation. What do you think we as investors need to see to be convinced of that? And what could you be showing us when we get that data come next year? Thank you so much.

Thanks, Evan. You know, one of the things that we saw when we were doing diligence on the Pellas was that there really hadn't been much value associated with Ampavelli. And, you know, I think there is a tendency to really focus on kind of lead products in companies. And for some of these programs where there is no treatment, there are also no analogs. And so I think what we see is, and what we've heard from a number of analysts and experts, is that there tends to be a placeholder value put in there. And people then want to wait and see the data. But, you know, 11,000 patients, and if you took even the Otsuka price for IGAN of $350,000, You know, you're getting somewhere between a three and $4 billion market. And when you consider that the phase two data showed an 80% resolution of AMR in an open label in a small study and obviously something we have to repeat in a phase three. But there is no product approved for AMR today. So, and, you know, the option for patients is either treatment with with Fosartamab or perhaps a second kidney transplant. I mean, I was in I was in Brazil recently and visited the hospital where they do more kidney transplants than anywhere else in the world. They estimate that somewhere between 10% and 20% of people on the kidney transplant list are people who have already had a kidney transplant. So there is a huge unmet need. This is a product that really seems to work. So we have very high hopes for this product.

Thanks, Chris. Let's go to our last question, please, Jess.

We'll go to Terrance Flynn with Morgan Stanley.

Hi. Thanks for taking the question. Maybe just a follow up on that last point. This is probably for Chris or Priya. Just in terms of the TRANSCEND trial, can you remind us of the powering on the primary endpoint and what's required from the FDA to support approval in the late AMR indication? And then how should we think about lateral implications from TRANSCEND for microvascular inflammation? Thanks.

Yeah. I can start. I mean, we haven't commented publicly on the powering. We believe we have a very robust trial design and power to really give us confidence in the outcome. So I think we remain confident in our trial design. As you know, the trial, the transcend trial is a six month placebo control. This is biopsy driven as an endpoint, which is really important. And then, you know, patients move on to maintenance for the next and I think durability, but the six-month time point are both important. We have been able to, I think that's another really good sign, but we've been able to accelerate the trial. So now we expect data in the first half of 2027. And I think overall, we remain really excited. Now the MVI is obviously a more recent, you know, diagnostic criteria through the BAMF criteria. and this is important because these are donor specific antibody negative patients, but it's a very important population. And what we decided to do along with our high bio team, they are absolute experts in the area, is to actually initiate the MVI trial, which is a transpired trial as soon as possible. So that trial is already underway. And so we will also have data emerging from that trial. and we think that yes, the Fasadamab mechanism of action of addressing plasma cells and the anti-CD38 will have an impact in both MBI as well as in AMR. MBI itself in the US is a sizable population of about 6,000 patients. So this remains an important auxiliary but very important aspect of the unmet need. So we think this is really a very, very important opportunity, and we remain confident that falzadumab really has a very good high probability here of giving us the data that we're looking for.

Thanks, Priya. Thanks, everybody, for joining today. If you've got follow-up questions, you know where to find us. Take care.

Thank you, ladies and gentlemen. That will conclude today's call. We thank you for your participation. You may disconnect at this time.