Biogen Inc. (BIIB) Q1 2020 Earnings Report, Transcript and Summary

Good morning. My name is Lisa, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Biogen First Quarter 2020 Financial Results and Business Update. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the conference over to Mr. Joe Mara, Vice President, Investor Relations. You may begin conference.

Good morning, and welcome to Biogen's first quarter 2020 earnings call. Before we begin, I encourage everyone to go to the Investors section of the biogen.com to find the earnings release and related financial tables, including a reconciliation of the GAAP to non-GAAP financial measures that we will discuss today. Our GAAP financials are provided in Tables 1 and 2, and Table 3 includes a reconciliation of our GAAP to non-GAAP financial results. We believe non-GAAP financial results better represent the ongoing economics of our business and reflect how we manage the business internally. We’ve also posted slides on our website that follow the discussions related to this call. I would like to point out that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. On today's call, I am joined by our Chief Executive Officer, Michel Vounatsos; Dr. Al Sandrock, EVP, Research and Development; and our CFO, Jeff Capello. Now, I will turn the call over to Michel.

Good morning, everyone, and thank you for joining us. I want first to acknowledge the challenging situation the global COVID-19 pandemic has created for so many people. Our hearts go out to everyone who has been impacted. We applaud the way our employees and everyone across the entire health care system is breaking down barriers and working together to address this pandemic. And we are committed to doing our part to support communities worldwide. At the same time, we are also committed to learning from the current situation and working to develop innovative new operating models, such as accelerating our digital capabilities which we believe will better position Biogen for the future. During these challenging and unprecedented times, Biogen’s mission and purpose remain the same. Over half a million patients around the world rely on us today to supply important medicines for serious diseases and there still remains an urgent need to develop innovative therapies for the millions of patients suffering from devastating diseases of the nervous system. Let me now provide you with an update on how we are operating our business throughout the pandemic. First, I would like to recognize the resilience and the adaptability of the Biogen team. Biogen personally felt the painful impact of these global crisis as many of our employees became sick early on and orders have since been affected. We have been fortunate that as of today all of our employees have recovered or are recovering. Most of our affected employees have continued to work and fulfill their duties. We are grateful to the public health authorities for all they have done and we are also thankful for the courage and compassion of the health care workers who have been helping us and continue to support so many. We took a number of actions early on to support our stakeholders and society at large, including, committing $10 million from the Biogen foundation to support global response efforts, launching a consortium with the Broad Institute of MIT Harvard and Partners Healthcare to build and share a biobank and giving Biogen employees who have recovered, as well as their close contacts, the opportunity to donate samples and medical data. Pursuing a process development and manufacturing collaboration with Vir Biotech, which is developing potential antibody therapies for COVID-19, providing medical equipment and supplies to Partners Healthcare in Massachusetts and developing and donating 3D printed personal protective equipment in Massachusetts and North Carolina. Engaging with investigators who may want to evaluate the potential of our interferon therapies or our anti-TNF biosimilars to treat COVID-19, facilitating volunteer efforts by our medically trained employees to serve as health care workers on the frontlines and by other [ph] employees to serve the community, and implementing policies and practices to safeguard our employees and communities, including asking almost all the employees to work from home at this stage. These are our initial commitments and we will continue to look for additional ways to help. At the same time, we have remained intensely focused on operating our business to serve the needs of all our patients and stakeholders. I am proud to see the Biogen team demonstrate agility by quickly defining innovative approaches to both mitigate risks and identify new opportunities across R&D, manufacturing, medical and commercial operations. Let me provide you with an update on several key areas of our business. At this time our supply chain around the world is functioning well. We continue to operate our manufacturing facilities and are working with organization across our supply chain to maintain continuity. And we continue to closely monitor the evolving situation. We are carefully considering recent regulatory guidance on conducting clinical trials during the pandemic and the safety of participants in our clinical programs is our top priority. To help mitigate the impact to our clinical trials, we are pursuing innovative approaches such as remote monitoring, remote patient visits and supporting home infusions. While we expect there may be some impact with timelines for some of our clinical programs, importantly we still expect the vast majority of the 10 remaining readouts we have recently highlighted to occur before the end of 2021. We have continued to have frequent interactions with the regulatory authorities, including for aducanumab. We have adjusted our commercial and medical affairs operations and accelerated our digital engagement with customers. We are working with regulators to enable home infusions for TYSABRI where appropriate. To date, our business and financials have remained strong. We believe that we are in a strong position to remain the leader in neuroscience based on the strength in our core business areas, a healthy balance sheet and financial position and a robust pipeline across several important disease areas. We continue to believe we have multiple opportunities for significant near-term value creation as we aim to be build a multi-franchise portfolio in areas such as Alzheimer, ALS, stroke, ophthalmology and lupus. Now, let me turn to highlights of the first quarter, starting with our financials. First quarter revenues grew 1% to $3.5 billion. First quarter GAAP earnings per share grew 13% to $8.08 and non-GAAP grew 31% to $9.14. Turning to our progress across our strategic priorities. First, we have made good progress towards the regulatory filing in the US for aducanumab. We have continued to have constructive engagement with the US FDA. We now have an open BLA and we have started to submit modules of the filing. We have participated in additional formal interaction using mechanisms such as Type C meetings and we are preparing for a pre-BLA meeting currently scheduled for the summer, following that meeting we expect to complete the filing in Q3. I'd like to thank the FDA and the aducanumab team at Biogen who have adjusted to working under the currency circumstances with COVID-19, in particular as some members of the Biogen team were directly impacted. Outside the US, we have had initial aducanumab discussions with regulators in Europe and Japan, although these interactions are still in the early stages. In March the first patient was dosed in the EMBARK re-dosing study, which aims to provide access to aducanumab for eligible patients previously enrolled in our aducanumab clinical studies. While we collect important data in the study, we do not believe it is required for the filing. From a manufacturing standpoints we currently expect to have adequate supply to meet anticipated demand for aducanumab initially using our facility in RTP, North Carolina which will later be complemented by the large next generation state of the art facility we are building in Solothurn, Switzerland. The construction is complete, and its validation remains on track. We expect it to be operating by the end of this year and to be producing some of the commercial supply of aducanumab in mid-2021. Overall, together with our collaboration partner, Eisai, we remain optimistic about the prospect of bringing aducanumab to market as the first therapy to reduce clinical decline in Alzheimer's disease. And we continue to progress in our market preparation – sorry, and launch readiness with an initial focus on the US. We hope that aducanumab marks the beginning of an era of new potential treatments for Alzheimer's disease. And we aim to build a broad franchise across multiple targets and modalities. This includes BAN2401 which we are collaborating on with Eisai, multiple programs targeting tau, our collaboration with CAMP4 to identify new druggable targets, our acquisition of CK1 from Pfizer as a potential symptomatic therapy and our new collaboration with Sangamo to develop a gene regulation therapies for a range of neurological indication including Alzheimer's disease. Second, Q1 MS revenues, including OCREVUS royalties were $2.3 billion, an increase of 9% versus the prior year. The number of patients on our MS products globally increased to 3% versus the prior year and our business continue to demonstrate resilience. We continue to launch VUMERITY in the US. We have been able to secure unrestricted access for VUMERITY faster than other recent competitive launches. We have also been pleased to see that a large proportion of VUMERITY patients have come from therapies older than TECFIDERA and approximately 30% of VUMERITY patients are naïve to treatment. We also make progress with our first ex-US regulatory filing of VUMERITY in Israel and plans to pursue approval in other the major markets worldwide. We were pleased that the claims of our TECFIDERA patent were upheld by the US Patent Office in a positive decision on the IPR challenge. This decision has been appealed and is pending. We expect decision from the Federal District Courts in Delaware and West Virginia and the actions later this year. Third, SPINRAZA generated first quarter global revenues of $565 million, a 9% increase versus the prior year, and a 4% increase versus the prior quarter, including the expanded access program and clinical trials over 10000 patients are being treated with SPINRAZA. This quarter important new data were published showing that clinically meaningful benefits SPINRAZA can deliver for teens and adults with SMA and we initiated a new study to evaluate the potential for even greater efficacy with a higher dose of SPINRAZA. Fourth, first quarter biosimilars revenue were $219 million, which represent 25% growth year-over-year. We estimated that our biosimilars generated approximately €1.8 billion of savings to the European Healthcare Systems in 2019 which we expect will continue to increase in 2020. This is critical as we work to create financial headroom for innovation and continue and contribute to the long-term sustainability of the healthcare system. Fifth, beyond Alzheimer's disease, we continue to develop and expand our pipeline. In particular, this quarter we submitted a regulatory fighting for an intramuscular formulation of PLEGRIDY in the US and in Europe which may be another important option for MS patients. Sixth, our cash flow generation remains strong and continue to provide us with significant optionality and flexibility to allocate capital. In Q1, we generated approximately $1.5 billion in cash flow from operations. We continue to have the financial flexibility and capacity to evaluate potential external business development and M&A opportunities and remain active on the BD front. As we have demonstrated in the past, we are committed to maximizing returns for our shareholders, while continuing to bring innovative therapies to patients, something that demands a thoughtful approach towards all our investment over both the short and the long term. In summary, despite the challenges due to the COVID-19 pandemic, Biogen has continued to execute well on our strategy. I will now turn the call over to Al for a more detailed update on our recent progress in R&D.

Thank you, Michel. And good morning, everyone. Before I begin let me first take a moment to say how proud I am of the way the R&D organization has stepped up in response to the COVID-19 pandemic. I'm inspired by their resilience and their unwavering commitment to our patients. Let me now review the steps we have taken within R&D. In line with recent global regulatory guidance, we have developed a set of principles to guide our clinical trial conduct under these exceptional circumstances. First, the safety of all of our clinical trial participants and our health care providers, as well as the integrity of the data we collect will remain paramount. Second, given the importance of our clinical trials to patients with serious diseases, we aim to continue our ongoing trials, as long as the risks to patient and healthcare provider safety, as well as data integrity can be sufficiently mitigated. Third, we are generally allowing enrollment of new patients, sites and countries into ongoing clinical trials. However this may be stopped on a study by study basis if such enrollment compromises our ability to mitigate risk to patient and health care provider safety and data integrity. Fourth, we may allow for the initiation of new clinical studies on a region by region basis, as long as the risk to safety and data integrity can be sufficiently mitigated. However, we are implementing a limited pause on the initiation of new clinical trials evaluating molecules which suppress the immune system or specifically modulate antiviral responses with a reassessment in the coming months. This includes pausing the initiation of the planned Phase III study of the pegylated anti-CD40 ligand fab in systemic lupus erythematosus in collaboration with UCB. And fifth, we are reviewing informed consent forms from all studies to ensure that potential risks associated with travel to study sites and where applicable product specific risks of viral infection are appropriately highlighted. At the same time, we are continuing to monitor how the current situation may impact our projected timelines for ongoing studies. While the situation remains fluid, we continue to expect the vast majority of the 10 remaining mid to late stage data readouts that we recently highlighted to occur by the end of 2021. However, we do anticipate that a portion of these 10 readouts will be delayed including the Phase III study of BIIB093, or IV glibenclamide for large hemispheric infarction, as this study involves administration of BIIB093 in an acute hospital setting. As we move forward, we will continue to prioritize both patient safety and data integrity. But we are not able to provide further details on the timing of readouts at this stage. As Michel mentioned, we are pursuing a number of initiatives to mitigate further impact to our ongoing clinical studies. These include remote monitoring, remote data verification, supporting patients and staff travel to study sites, launching a direct-to-patient delivery service for our investigational therapies, supporting at home infusions and providing telemedicine options to minimize the number of missed study visits and study withdrawals. Finally, each study in our portfolio will undergo a COVID-19 specific risk assessment to highlight study specific risks to operational or scientific aspects, identify appropriate mitigation strategies and ensure compliance with evolving regulatory guidelines. We recently rolled out remote site monitoring and we are working to implement the remainder of these initiatives as soon as possible. In parallel with these efforts to mitigate risk to our pipeline, we aim to elucidate - help to elucidate the mechanisms underlying COVID-19 pathogenesis and advance the development of potential therapeutic solutions. To this end, this month we announced that we are launching a consortium that will build and share a COVID-19 biobank working with the Broad Institute of MIT and Harvard and Partners HealthCare which includes Massachusetts General Hospital and Birmingham Women's Hospital. This biobank aims to centralize and facilitate study of a large collection of de-identified samples and medical data with the aim of unraveling the biology of COVID-19, linking molecular signatures with clinical presentation and accelerating the search for potential treatments. Many of my Biogen colleagues have been eager to find ways to help during this pandemic and we are proud to be a founding member of this consortium. The biobank will include samples and medical data from volunteer Biogen employees who have recovered from COVID-19, as well as their close contacts. And last month we signed a letter of intent and began collaborating with Vir Biotechnology to accelerate process development and manufacturing of human monoclonal antibodies that may neutralize SARS-CoV-2, the virus responsible for COVID-19. We are proud to leverage our extensive expertise and capabilities in advanced biologics manufacturing to collaborate with Vir and potentially accelerate the development of therapies to combat this epidemic. Finally, given the effect of that type 1 interferon show and the antiviral response in-vitro. we are engaging with investigators who may be interested in evaluating the potential of our beta interferon products in the treatment of COVID-19. In sum, the R&D organization at Biogen has taken significant steps to respond to the unprecedented challenge posed by COVID-19. We aim to continue advancing our innovative neuroscience pipeline, while contributing to the shared understanding of COVID-19 biology and the advancement of potential treatments. Let me now turn to the advances we made across our pipeline in the first quarter, starting with Alzheimer's disease and dementia. As Michel point mentioned, we continue to make progress toward the regulatory filing for aducanumab in the United States. We have begun to submit BLA modules and expect to complete the filing in Q3. At the virtual ADPD meeting earlier this month, we held an encore presentation of the aducanumab Phase III topline results. The data in this presentation were previously presented at the CTAD Annual Congress last December. And last month, we dosed the first patient in the EMBARK re-dosing study. In this study eligible patients previously enrolled in our clinical trials, including patients previously treated with either aducanumab or placebo, will be titrated to 10 milligrams per kilogram aducanumab infusions every four weeks. Beyond aducanumab, we continue to advance a broad Alzheimer's disease portfolio including the Phase III study of BAN2401, BIIB080, a tau-targeted antisense oligonucleotide in Phase I and BIIB076, an anti-tau antibody in Phase I, and gosuranemab, a distinct anti-tau antibody in Phase II. Turning to neuromuscular disorders. Last month an independent observational cohort study evaluating the safety and efficacy of SPINRAZA in 139 teens and adults with SMA was published in Lancet Neurology, representing the largest study of SPINRAZA in teens and adults to date. In contrast to the natural history of SMA, this real-world study found that treatment SPINRAZA was associated with statistically significant increases in total Hammersmith scores compared to baseline at 6, 10 and 14 months of treatment. Of note, a clinically meaningful improvement defined as an increase of at least three points in the Hammersmith scores was observed in 40% of patients at the 14 month assessment. No new safety concerns were identified and no serious adverse events were reported. These data once again underscore the durable efficacy and well-established longer term safety profile of SPINRAZA across a broad range of SMA patients, including adults. Last month we dosed the first patient in DEVOTE, a Phase II/III study evaluating whether higher doses of SPINRAZA can provide even greater efficacy than the currently approved dose. This study was motivated by SPINRAZA as well characterize safety profile, as well as our PKPD data suggesting that individuals with higher CSF concentrations of SPINRAZA achieve greater improvements in CHOP INTEND scores and motor milestones. Also last month, we submitted an IND for BIIB105, an antisense oligonucleotide targeting ataxin-2 for sporadic ALS. The FDA has since reviewed the IND and deemed it to be safe to proceed. We are particularly excited by this program for the 90% of our ALS patients who have sporadic disease. Trinucleotide repeat expansions in the ataxin-2 gene have been associated not only with an increased risk of developing ALS, but also with an increased rate of disease progression in those patients. Importantly, ataxin-2 was originally identified as a modifier of TDP-43 toxicity, a pathology common to more than 90% of the ALS population suggesting that reduction of ataxin-2 could be therapeutic in the sporadic ALS population. Moving to our progress in MS and neuroimmunology. For patients with relapsing forms of MS, PLEGRIDY remains a convenient treatment option with a well-established safety and efficacy profile. However tolerability, including injection site reactions has been the leading cause of discontinuation. At the ACTRIMS meeting held in February, we presented data investigating whether intramuscular administration of PLEGRIDY might reduce injection site reactions compared to subcutaneous dosing, while maintaining bioequivalents. On the primary endpoint there was bio equivalence between the two routes of administration on plasma exposures. We also found that the proportion of patients reporting injection site reactions was reduced by over 50% after intramuscular dosing compared to subcutaneous dosing. We have submitted regulatory filings for an intramuscular formulation of PLEGRIDY in both the United States and the EU. In March, the FDA updated the labels of AVONEX and PLEGRIDY to include data to assist health care providers when considering use during pregnancy. This follows label updates in Europe last year that removed the contraindications for use during pregnancy. These changes to the label are significant given that women are diagnosed with MS at least two to three times more frequently than men and women are often are often affected during their childbearing years. We recently received top line data from Opus, a randomized Phase II study exploring the efficacy, safety and tolerability of natalizumab as an adjunct of therapy in patients with drug resistant focal epilepsy. However, the primary endpoint was not met and thus we have decided to discontinue development of natalizumab in drug resistant focal epilepsy. Last month data from the Phase I/II dose escalation study of BIIB112 are AAV-based gene therapy targeting X-linked retinitis pigmentosa or XLRP, were published in Nature Medicine. Overall, results from this study indicated an acceptable safety profile and dose responsive gains in visual function with 7 of 18 patients experiencing early increases in central retinal sensitivity that were sustained at month 6 of follow up. And in business development, we recently announced a broad collaboration with Sangamo Therapeutics to leverage their proprietary zinc finger protein platform. This technology enables the generation of designer DNA binding proteins that can be easily packaged into an AAV vector and serve as specific potent and tunable regulators of gene expression. Through this collaboration we have also - we also have access to Sangamo's capsid engineering platform, which has the potential to potentially - which has potential to identify novel capsids to allow more efficient and specific delivery of AAV payloads to the central nervous system. We will first focus on programs for Alzheimer's disease, Parkinson's disease and a third neuromuscular disease target with exclusive access to up to 9 additional neurological targets. Overall, we remain undeterred in our mission to develop novel therapies for devastating neurological diseases and I am proud of our team's agility in responding to this pandemic. I am optimistic that we will work through these challenges, mitigate potential impacts to our programs and continue to progress our pipeline. I will now pass the call to Jeff.

Thanks, Al. Good morning, everyone. Prior to starting my comments on the financial performance, I want to highlight that we believe the fundamentals of our business are strong and we are well-positioned. Our products are important therapies for patients living with serious diseases. We have strong operating process, enabling us to operate effectively through these challenging times. We also pride ourselves in our ability to execute well commercially. In addition, we are well capitalized financially. These are however unprecedented times that will have an impact on our business. I will now review our financial performance, highlighting the various factors to give you a sense of our performance and then wrap up with commentary on our outlook. I'll start with our revenues. Total revenues for the first quarter grew 1% year-over-year to approximately $3.5 billion. It's important to note that we believe Q1 benefited from approximately $100 million attributed to accelerated sales due to COVID-19 pandemic, primarily in Europe. As a reminder, Q1 2019 included a benefit of approximately $200 million in other revenues due to the sale of hemophilia inventory to Bioverativ. Overall, we executed well in our MS business, delivering revenues of approximately $2.3 billion in the first quarter of this year, including OCREVUS royalties of approximately $162 million, growing 9% versus prior year. Global MS revenues in Q1 2020 increased 7% versus the prior year without OCREVUS royalties. US MS revenues excluding OCREVUS increased 4% or $58 million versus the prior year. US MS revenues in Q1 2020 were impacted by a decrease from channel inventory of approximately $115 million compared to a decrease of approximately $170 million in Q1 2019. We estimate that we had $54 million in additional sales due to a greater number of shipping days in the quarter. Roughly half of which impacted the inventory quarterly change. In addition, we believe we benefited from a net $15 million sales impact due to COVID-19 primarily impacting TECFIDERA. Outside the US, our MS revenues grew 11% or $77 million on higher volumes, with minimal price impact and an estimated COVID-19 beneficial impact of $59 million, primarily split between TECFIDERA and interferon. Global first quarter Fumarate revenues, including TECFIDERA and VUMERITY increased 10% versus the prior year, driven by revenue growth both in the US and outside the US. In the US, Fumarate revenue grew at 8% or $60 million versus prior year. US Fumarate revenues were impacted by a decrease in channel inventory of approximately $85 million in the first quarter of 2020 compared to a decrease of approximately $110 million in Q1 2019. Versus the prior year, we saw favorable demand for TECFIDERA which we believe is primarily due to the extra shipping days and COVID-19 impact with roughly stable underlying performance without those impacts. After an initial channel load in Q4, VUMERITY had sales of $2 million in the US in the first quarter of 2020. And we were making good progress securing access and reimbursement. Within the US we were pleased to see strong execution with continued stability in our share of total prescriptions for the fumarates versus the prior quarter, in light of increased competition. It's important to note that the vast majority of TECFIDERA and VUMERITY prescriptions in the US are delivered via mail order and as a result we do not expect a significant impact to TECFIDERA due to COVID-19. Outside the US, TECFIDERA again performed very well with Q1 2020 revenues growing 15% or $42 million, including an estimated benefit of approximate $28 million due to inventory dynamics related to COVID-19. Importantly, the number of TECFIDERA patients outside US grew by approximately 13% versus the prior year, driven by positive patient growth in the large European markets and approximately 40% patient growth in Latin American, Asia-Pacific combined. In total, we were pleased to see strong global patient growth for TECFIDERA of approximately 8% year-over-year. Q1 global interferon revenues, including both AVONEX and PLEGRIDY decreased 7% versus Q1 2019 due to continued shift from the injectable platforms to oral or higher efficacy therapies. In the US, interferon revenues decreased 11% or $35 million versus the prior year. Within the US AVONEX and PLEGRIDY were impacted by the continued transition to oral and high efficacy therapies and by decreasing channel inventory of approximately $35 million [ph] compared to a decrease of approximately $50 million in Q1 2019, partially impacted by the extra shipping days. Similar to TECFIDERA the vast majority of interferon prescriptions in the US are delivered via mail order. Outside the US, interferon revenues were stable versus the prior year with an estimated benefit of approximate $21 million due to increased channel inventory related to COVID-19. Given their safety profile and potential antiviral properties, we are seeing an increased interest in our interferon products, which may present an opportunity for less erosion in this franchise going forward. This is a dynamic that we'll watch carefully as time progresses. TYSABRI worldwide revenues increased 13% or $62 million versus the prior - versus the first quarter of 2019. In the US TYSABRI revenues increased 13% versus the prior year or $33 million. US TYSABRI revenues were impacted by an increase in channel inventory of approximately $5 million compared to a decrease of approximately $10 million in Q1 20 19. Within the US, we were pleased to see roughly stable adjusted volumes and share of new prescriptions, as well as an increased share of total prescriptions for TYSABRI versus the prior quarter. Outside the US, TYSABRI revenues increased 14% or $29 million versus the prior year, with an estimated benefit of approximately $7 million due to increased channel inventory related to COVID-19. Q1 2020 TYSABRI revenues benefited by approximate $20 million due to pricing adjustment in Italy related to prior periods. Outside the US, we are pleased to see continued patient growth of 4% for TYSABRI versus the prior year. Given that TYSABRI is administered in the physician's office or hospital setting, we do expect an impact from COVID-19 on TYSABRI sales. As we attempt to mitigate this risk, we are working to enable TYSABRI home infusions within the US where appropriate. Overall, we were pleased with the execution of our MS franchise and the continued strong performance of our MS business in the first quarter. While there is some uncertainty in our MS trajectory given COVID-19, particularly for TYSABRI, there are also opportunities and we remain encouraged by the resilience of our market leading franchise. Let me now move on to SPINRAZA - excuse me. Global first quarter SPINRAZA revenues increased to 9% for the prior year to $565 million. In the US, revenues increased 5% versus Q1 2019 and decreased 3% versus Q4 2019. The number of patients on therapy in the US increased 1% as compared to the end of the fourth quarter of 2019, driven primarily by growth in the number of adults. We believe US SPINRAZA revenues benefited by approximately $6 million due to COVID-19. In addition, leading indicators suggest that we may be seeing a decrease in new patient starts, particularly among adults, as well as a decrease in compliance, both related to COVID-19. We are aware that some physicians and hospitals are delaying SPINRAZA dosesm as they make difficult prioritization decisions, while confronting COVID-19. Although we continue to work to ensure patients receive this critical treatment and I've seen more centers come back online. Outside the US, SPINRAZA revenues increased 12% versus Q1 2019 and 10% versus Q4 2019, driven primarily by increased penetration across all major geographies. With an estimated benefit of approximately $5 million due to increased channel inventory related to COVID-19. Outside the US, we have also seen a moderate impact on demand for SPINRAZA due to COVID-19, which we expect may continue. As a reminder, the first quarter of last year benefited from a positive pricing adjustment of $14 million in France, negatively impacting the year-over-year comparison. In total outside the US, the number of commercial SPINRAZA patients increased approximate 10% versus the prior quarter. Broad growth occurred again across all major regions with an increased number of countries contributing, as we continue this very successful product launch. Overall, we were pleased with SPINRAZA’s performance in the first quarter. While we recognize there is some uncertainty in its trajectory given COVID-19 pandemic, we still believe there are continued opportunities for growth, given the significant number of untreated patients, including in many established and emerging markets. Let me now move on to our biosimilars business, which generated $219 million in this quarter, growing 25% versus the prior year or $44 million. We estimate that there are now approximately 215,000 patients using our biosimilars in Europe. BENEPALI remains the number one prescribed Enbrel biosimilar across the major EU five markets. FLIXABI volume grew 90% versus the prior year, and IMRALDI volumes grew 28% versus fourth quarter. Despite our biosimilars business benefiting by approximately $15 million due to COVID-19 with the quarter, this business again performed well and has the opportunity to continue to grow both in Europe, as well as potentially within the US and other geographies with our additional assets. Total anti-CD20 revenues in Q1 increased 1% versus the prior year with increased OCREVUS royalties offsetting decreased revenues from RITUXAN due to recent introduction of biosimilar. Total other revenues in the first quarter decreased 63% versus the r year, due primarily to the prior period sale of approximately $200 million of hemophilia inventory to Bioverativ in the first quarter of 2019. Let me now turn to gross margins. Q1 2020 gross margin was 87%, an improvement versus the 83% in the prior year, due to lower contract manufacturing revenue and was relatively stable versus the prior quarter. Q1 GAAP and non-GAAP R&D expense were both 13% of revenue. As a reminder, R&D expense in the first quarter of 2019 included approximate $39 million related to our agreement with Skyhawk, and approximately $45 million in net closeout costs for the Phase III studies of aducanumab. R&D expense in Q1 2020 was lower in part to the timing of milestones which are difficult to predict. Note, in the second quarter of 2020 we expect to record a GAAP and non-GAAP R&D expense of $125 million for the license fee related to our collaboration with Sangamo. Q1 GAAP and non-GAAP SG&A were both 16% of revenue. We still expect SG&A to increase throughout the year, as we ramp up our commercial preparations for aducanumab. Q1 GAAP other expense was $120 million, which included $61 million in unrealized losses on investments, primarily driven by decrease in the fair value of our equity investment in Ionis. Q1 non-GAAP other expense was $60 million. In Q1 of this year, our GAAP and non-GAAP tax rates were both approximate 17%. In the first quarter 2019 our GAAP FX tax rate included a one time charge related to the planned divestiture of our Hillerød. Denmark manufacturing operations, as well as higher unrealized gains. We repurchased approximately 7.3 million shares in the first quarter at an average price of $303 for a total value of approximately $2.2 billion. The share repurchase program authorized in March 2019 has now been completed and as of the end of the first quarter approximately $4.1 billion was remaining under the share repurchase program authorized in December. That now brings us to our diluted earnings per share. In the first quarter we booked GAAP EPS of $8.08, an increase of 13% versus the prior year and non-GAAP earnings of $9.14 per share, a 31% increase versus the prior year. We generated approximately $1.5 billion in net cash flows from operations in Q1. We ended the quarter with approximately $4.8 million in cash, marketable securities and $6 billion in debt. As we think about the balance of the year, we acknowledge that these are unprecedented times and there's significant uncertainty. Let me now outline what we do know. We again performed well operationally in the first quarter and saw some benefit from accelerated sales that occurred relative to COVID-19. We expect some volatility in revenues between the quarters. We have seen some disruption start to materialize, particularly for TYSABRI and SPINRAZA due to physician administration and facility capacity, as we have seen some delays in dosing. We believe our therapies are essential for patients and we are actively working to help patients maintain their dosing schedules. We are also mindful of the potential macro risks from the economic environment and the impact on the health care systems, including a potential impact on payer mix. At the same time, as demonstrated in the past, we remain focused on strong commercial execution, which we believe may in part help mitigate these risks. We also may benefit from a potential decrease in competitive pressures across several business areas and potentially renewed interest in our interferon therapies. As a reminder, we have a policy to update our guidance once a year and in July and we should hopefully know more by then. Let me now turn the call back over to Michel for his closing comments.

Thank you, Jeff. I am incredibly proud of how the Biogen team has responded to the current situation. Our employees all around the world have demonstrated their resilience and dedication to advancing our mission, as well as their compassion and empathy in wanting to be part of the solution to this terrible disease. Our business has remained strong. We delivered solid financial results in the first quarter and we have demonstrated a GDP in adapting many aspects of our operations, including the conduct of most of our clinical trials. While do we do anticipate some risks to our business as a result of the pandemic, we believe our opportunities for value creation remains compelling, given the significant unmet medical need in the diseases we are pursuing. With a strong core business in MS, SMA and biosimilars, we believe we have the foundation to continue building a multi-franchise portfolio. We believe the vast majority of our 10 data readouts remains on track to complete before the end of 2021. Importantly, we have made good progress on the aducanumab filing and we are actively preparing for potential commercial launch, as we are getting ready to lead the fight in Alzheimer's disease. Finally, I want to reiterate our commitment to maximizing returns to our shareholders and bringing innovative therapies to patients over the long term. These demands that we continue to allocate capital efficiently, effectively and appropriately, as we have demonstrated in the past we will always strive to have an optimal capital structure, as well as aim for superior returns from the investments we make. Our response to this current situation exemplifies our broader purpose as an organization as we aim to pioneer science for the betterment of humanity. This includes doing the right thing for patients, employees, the environment and the community, all of which we believe contribute to long-term sustainable shareholder value. I am proud of what Biogen stands for and I believe this approach positions us well to be a sustainable organization over the long run, as we remain focused on being the leader in neuroscience to address the tremendous societal needs in this space. Now more than ever, I would like to thank our employees around the world who are dedicated to making the positive impact on patients' life and all of the health care workers who are on the frontlines battling COVID-19. I have been truly impressed how the entire health care community has stood up in the space of this quarantine [ph] times. With that, we will open the call for questions.

Thank you. [Operator Instructions] And our first question comes from the line of Marc Goodman from SVB Leerink. Your line is open.

Yes, good morning. On the ADU filing, it just seems like there's been a change in the language a little bit with regards to the filing. I guess, everybody was kind of assuming that you had filed or were about to file and now it just seems like there was a delay. Can you give us a little more color on what's going on behind the scenes? Is it - is it COVID related? Is it a change in the language of what you're hearing from FDA? And then just secondarily, can you just give us a little more color on what you're talking about with the interactions in Europe and Japan as well? Thank you.

So thank you for the question that is the focus of the attentions of everyone and a priority within the organization. Again, we are on track and we are receiving input from the FDA and we are engaging very well. I would say, there are two main reasons. While it's taking a little bit more time and at the company we are prioritizing the quality of the submission versus the timing. We don't want to rush and then face challenges. So the quality is important and we have to keep in mind that there is an unprecedented dataset, plus COVID, okay? The database - database lock was in November and is very complex with more than 3000 - 3200 patients, multiple biomarkers and multiple endpoints. And if you couple that with we could be a one [ph] it makes a complex and unprecedented dataset. So I just want to put that upfront before Al build on that. Al?

Yeah. So can you hear me? So I just want to – I have to say that it's – look, timing is not easy to predict. We were trying to do that since the initial announcement in October and this is an unusual process. But I want to emphasize that we now have an open BLA. We've started to submit modules. We have continued constructive engagement with FDA and we believe we're on track in terms of the potential for approval. There's - I wouldn't read too much else into this. And in terms of your second part of your question, which I believe was Japan and Europe, we have started engagement. It's still kind of early relative to the process with FDA, but we have started.

Our next question comes from the line of Terence Flynn from Goldman Sachs. Your line is open.

Hi. Thanks for taking the question. Maybe just a follow up there, I was just wondering if you can tell us if the FDA has asked for any additional analysis of aducanumab data. And then Michel and Al, I would just be curious if your level of confidence in the dataset is the same now as when it was when you announced your intention to file for approval last year? Thank you.

So level of confidence remains the same. Al, will take the rest of the question.

Yeah. I would say that we are constantly doing analysis, but nothing really has changed in terms of - nothing has come up in the data that changes our interpretation of the data. Our view of the fundamentals hasn't changed. And I emphasize that we remain constructively engaged. These additional type C meetings are really to further engage with FDA. As we have been since the very beginning actually, starting last June when we had our first type C meeting.

And our next question comes from the line of Umer Raffat from Evercore ISI. Your line is open.

Hi. Thanks so much for taking my question Michel, a quick one for you and one for Al. Michel, you keep mentioning the word good progress on describing aducanumab, even though it seems like you now probably need a pre-BLA meeting which didn't sound like was the case previously. So can you elaborate on that. And Al, it seems like I'm just reading the [indiscernible] what you just said and it seems like you're having to run additional analyses, and that those might be the reason why additional meetings are happening with FDA. And I guess my question is has FDA previously shared feedback with you on the way you guys did imputations for non-completers because you might recall, the reason EMERGE [ph] hit on the high dose was because the effect size in the completers was assumed to be the same as non- completers and also the whole question around whether FDA would want you to pull the data, has FDA shared feedback? We're not asking what the feedback is, but has FDA shared the feedback with you on that?

So Umer, last time we had the opportunity to dialogue. We didn't have an open BLA. We didn't have to file to the FDA. So there is good progress. We had traditional type C meetings and you have to read here high interest from the FDA. So this is what we continue to qualify as being positive progress. Al?

Umer, I would just say that we had always planned to have a pre-BLA meeting with FDA. That hasn't changed. That was always in the planning. And look, some members of the team did get COVID and I can tell you it's hard to work when you have COVID. The fatigue, mental or physical fatigue was such that there were some people who were affected by the disease. So I think that - that's part of it, but I would say that most of it is that - I would say the main point is that nothing has come up with the data that has changed our interpretation. We believe EMERGE is a positive study. It was positive on the pre-specified primary and all three secondary endpoints. You know, I mean, we have done an analysis on ENGAGE to try to figure out why that result was different. But we believe that the fundamentals are the same and that the potential for approval remains the same as Michel said from the very beginning.

And if something would have change, we’ll communicate so.

Our next question comes from the line of Ronny Gal from Bernstein. Your line is open.

Hi. Unfortunately, we probably have to – thank you for taking the question. We’ll stay with the aducanumab theme. I guess the question is twofold. First one, have there been new questions that were raised by the data. I mean we all are familiar with some of the issues you've raised before and how you address them. But essentially as you kind of look on this and as the FDA now has an open BNA [ph] opportunity might have access to the data. Have new questions that have not been raised before raised by this? And second, should we expect you to present any more data from aducanumab during this year and any new analysis that you expect to present before we actually get to see the FDA review?

Ronny, this is Al. There really are no new questions today. You know, as I said earlier that the data you know, we haven't –come up with nothing that really changes our interpretation of the data. And so I would say that fundamentally there are no big changes and no new questions. And I would also say that we're not planning on presenting anything more publicly at this time, until - hopefully until approval. But that's our plan.

Our next question comes from the line of Phil Nadeau from Cowen and Company. Your line is open.

Morning. Thanks for taking my question. Again, sticking with the aducanumab theme, I guess a two part question. One is, just going back again to what has changed in the Q4 call. It sounded like you had said at that time all that need to happen was some submission of documents and there was no mention of additional type C meetings approved BLA meetings. So I guess, where we all mistaken that you still need to have those meetings and that was always part of the plan or did something come up again kind of asking the same question that prompted the need for those meetings? And then second, I think we were all trying to debate here as is the FDA is interested in aducanumab. I know you said that there's a high level of interest, but could you maybe give us some better sense of the FDAs current appreciation for the data and whether you can determine if there's controversy within the FDA about the quality of the results? Thanks.

Al?

Phil, this is Al, I just want to say that this is an unusual process. You know, this is unlike anything I've ever been involved with before my 22 years at Biogen. So - and the nature of this process has been collaboration from the very beginning from the type first type C meeting. So it's been a highly collaborative process, I would say and then you know yes, submission of documents is easier to say. But the BLA is pretty complex. There are multiple sections, multiple modules and so I know it sounds easy to pull together submission. But let me tell you it's not. And I think that - and it's been difficult to predict the timing partly because it's been an unusual process right from the beginning and we've always, you know, quite frankly we've been having type C meetings since last June and that hasn't changed actually that the fact that we're doing type C meetings has been the same since the very beginning. So those are the main points.

Our next question comes from the line of Michael Yee from Jefferies. Your line is open.

Thanks for the question. And if it hasn't been said before, hope you guys are very safe, you know, we all know how hard it's been hit and everyone in the financial community appreciates it. I guess my question is for Al, you mentioned in the pre-BLA meeting, I know this is coming up. Can you just maybe talk about what type of topics or key questions would be addressed there? And is it safe to say that additional subgroup analyses like positive versus negative and geographical differences, those type of analyses have been done and are all part of this package? Thanks so much.

Well, I would say that geographic issues, subgroup analyses, that’s standard practice for every single BLA I've ever been involved in. In fact, there are sections of the model [ph] that call for looking at data from the various geographies. So that's not - that's not different from any other BLA I've ever been involved in. At a typical pre-BLA meeting you go through - it's more like an operational meeting, you have various sections of the FDA that – they’re going to be involved in the review of the BLA. You sit down and you talk about how it's going to be submitted. What's going to be submitted exactly, and there's some agreement on the operational aspects of the actual submission. That's the typical pre-BLA meeting.

Our next question comes from the line of Jay Olson from Oppenheimer. Your line is open.

All right. Thanks for taking my question. It's great to hear you all well and I want to commend you for the work that you're doing to fight COVID-19. I had a question maybe a little longer term question about aducanumab. And as you begin to contemplate home infusion of TYSABRI, does that set the stage for potential delivery of aducanumab by home infusions and will that be done by Biogen employees or are you going to engage a third party to do that? Thank you.

Well, home infusion - the home infusion of intravenous drugs has been in place for decades. I used to prescribe some drugs by home infusion myself back when I practiced and so it's not uncommon, whether or not it will be done with aducanumab, we haven't disclosed yet, but it would not be something that would be difficult to imagine. It's a - it's a very well the infusions themselves are very well tolerated. So it would not be difficult to imagine that after approval.

Having said that, I think that launching a product in the post-COVID environment would be very interesting to assess, beyond I would say the normality of what we are preparing on many aspects, the ability to meet beyond digital channels face to face, how to engage, but also infusion and much more. And this we are getting ready. There are two dynamic going on, one is managing the lifecycle of well-established product. This is what we are doing, we are doing very well and launching a new product in a COVID environment is a challenge, in a post-COVID its still yet to be assessed.

Our next question comes from the line of Evan Seigerman from Credit Suisse. Your line is open.

Hi, all. Thank you for taking the question. I'm actually not going ask on aducanumab. I want to ask one, so yesterday there was an appellate court ruling on the 001 patent for TECFIDERA highlighting a potential launch of the banner monomethyl fumarate. Kind of how should we interpret this ruling? And if you were to lose one or both of the upcoming district court cases on TECFIDERA, how would you act to protect the franchise?

So Evan, this is Jeff. So you know the banner product is not a directly substitutable A/B product. So I think that's the first thing that's important to understand. So if and when it gets launched we don't think there'll be a significant impact at this point in time. And then with regard to the two court cases, obviously we were very pleased to get the favorable ruling from the IPR ruling and I think that's the third time that patent is stood up. So we think we've got a pretty strong patent position. However if we're unsuccessful with either the two district court cases, we've got VUMERITY as a product that we can kind of look at, is a fumarate strategy that we're looking at. We've got growth opportunities around the world in pretty strong results outside the U.S. We think SME has got good growth potential, BBU and then of course you've got the aducanumab potential as well. So you know, I think we’ve got a pretty strong franchise will grow around it.

Great. Thank you.

Our next question comes from the line of Cory Kasimov from JPMorgan. Your line is open.

Hey. Good morning, guys. Thank you for taking the question. I guess, going back to aducanumab, I wanted to better understand what it means to submit modules for your BLA before having that pre-BLA meeting, was this - I guess was this always a rolling BLA submission, was that the intent all along just trying to understand the meaning and having this pre-BLA meeting we didn't think this was going to be necessary as of the last call? Thanks a lot.

Yeah. So Corey, this is Al. I - the common technical document is composed of various modules and there for example quality modules related to manufacturing process. There are non-clinical sections and then there's the clinical sections which culminates in a clinical overview which is - so there are summary documents of the actual study reports of individual clinical studies. And so those are the three main sections. And as you can imagine the non-clinical was you know, it was already kind of ready because not much has been done since - non-clinically since the early days. It still had to put together the actual documentation and so forth. So those are the - those are the sections of the common technical document. They're all submitted electronically and so - and look we had starting in around October or so we did start to contemplate submitting modules as they became available. That was our plan. But at pre-BLA meeting is still pretty common practice, as I said to get both sides Biogen and FDA to be agreed to have agreement on the operational aspects of the of the CPD. So I would not read very much into that as I said, we had planned to have that meeting from the very beginning.

We probably have time for about two more questions.

Thank you. Our next question comes from the line of Matthew Harrison from Morgan Stanley. Your line is open.

Good morning. Thanks for taking the question. Sorry to stay on aducanumab, but I'm really struggling with the commentary that you're giving this morning. So I was hoping maybe you could just talk about one specific thing. I mean I think your prior guidance was that you would have a filing in early 2020 and today you're talking about a 3Q filing which seems like a significant delay to me, yet your characterization seems like nothing has changed and you know sort of all of your expectations are in line. So it seems like there's a significant disconnect with the timeline versus your commentary and I'm just hoping you can maybe take a moment to explain to us what has happened. Thanks.

So our goal right from the very beginning was to try to provide estimates of timing of this filing since actually the announcement in October. But the timing is always not easy to predict. And in fact, as I said before this is an unusual process, so it's even harder to predict timing when you have a process that actually is pretty unusual and in my experience unique. I would just say that the constructive engagement though has been there since the very beginning that continues. These type C meetings are formal ways to have engagement with FDA, pre-BLA meeting is another formal meeting with FDA to continue on the path to approval. We have an open BLA and yes there's is a - we said early 2020, so now it's Q3, we did have some impact from COVID, but I would say that overall what we're saying is that the potential for approval we're still on track with that.

And our next and final question for the day will come from the line of Carter Gould from Barclays. Your line is open.

Good morning, guys. Thanks for taking the question and squeezing me in. I guess maybe different spin on the aducanumab question. Obviously we got Gantenerumab data, a DIAN-TU data in the quarter. Al, can you maybe provide your perspective on the appropriateness of reading through from the lack of cognitive benefit in that study to aducanumab and if these data have in any way kind of changed the conversations with FDA? Thank you.

Thanks, Carter. First of all, I want to congratulate Randy Bateman and all the investigators in DIAN-TU. I think it's a beautiful study. It's very hard to do because although they are - it's a homogeneous population in terms of they all have autosomal dominant Alzheimer's disease from the genetic and biological point of view, it's pretty heterogeneous in terms of clinical, they could be two decades, one decade, a few years prior to becoming symptomatic. So how do you pull data from that heterogeneous clinical collection? Also it's a relatively small study, 50 patients per arm I believe roughly. So the DIAN-TUlooked at both Solanezumab and Gantenerumab. Solanezumab had no change in amyloid PET based on imaging. And there was no effect. So that's not too surprising. Gantenerumab did have an effect on amyloid PET. However, I want to compare the magnitude of the effect between Gantenerumab and aducanumab. And the only way to do that really is to use the centiloid scale. The whole point of the centiloid was developed so that you can compare cross studies because people use PET ligands, people have different reference regions that they use to obtain the SUVR score. In the PRIME study, 10 milligrams per kilogram of aducanumab was associated with a change in the centiloid scale of about 57 in one year, in the DIAN-TU study, Gantenerumab was associated with a change from baseline of about 14 centiloid units over four years. So I think that's pretty different. And we were trying to make at the CTAD meeting is that dose matters and that the robustness of amyloid removal matters and we saw that in the data and I think we presented that. So in some ways I looked down at the DIAN-TU data and I think it kind of confirms what we have been saying that you have to have high doses and robust removal of amyloid in order to see a clinical benefit.

I’ll turn it over to Michel for some closing comments. Thanks, everybody.

So thank you all for attending the call. I would like to say that even if personally affected by this terrible pandemic, Biogen is demonstrating superb resilience. Biogen is even stronger today and we are well-positioned for the future starting with aducanumab, but also looking forward to all the important readouts in the coming period.

Thank you, everybody.

Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now disconnect.