Good morning. My name is Ally and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Biogen Third Quarter 2023 Earnings Call 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]. Today's conference is being recorded. Thank you. I would now like to turn the conference over to Mr. Chuck Triano, Head of Investor Relations. Mr. Triano, you may begin your conference.

Thank you, Ally. Good morning and welcome to Biogen's third quarter 2023 earnings call. Before we begin, I'll remind you that the earnings released and related financial tables including our GAAP financial measures and a reconciliation of the GAAP to non-GAAP financial measures that we will discuss today are located in the Investors section of biogen.com.. Our GAAP financials are provided in tables 1 and 2, and table 4 includes a reconciliation of our GAAP to non-GAAP financial results. We believe non-GAAP financial results better represent the ongoing economics of our business and reflect how we manage the business internally. We have also posted slides on our website that follow the discussion related to this call. I would like to point out that we will be making forward-looking statements, which are based on our expectations. These statements are subject to certain risks and uncertainties and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. So, on today's call, I'm joined by our President and Chief Executive Officer, Chris Viehbacher; Dr. Priya Singhal, Head of Development; and our CFO, Mike McDonnell. Chris, Priya, and Mike will each make some opening comments and then we'll move to the Q&A session. And to allow us to get through as many questions as possible, we kindly ask that you limit yourself to one question. I will now turn the call over to Chris.

Thank you very much, Chuck. Good morning, all. I think we released a very good set of results this morning ahead of expectations. But of course, we're all too consciously aware that really what most of you are interested in is where's Biogen going. To that end, we outlined five priorities that we believed we needed to achieve to put Biogen in a position to be able to grow again sustainably. I think in the first nine months of the year, we've made an awful lot of progress. And indeed, I would say, the third quarter was a particularly busy quarter. To remind you all what those priorities were really was to focus our teams and our resources on new product launches. And that is a little easier said than done. We're a company that has a long heritage in the treatment of multiple sclerosis. And teams get very passionate about patient outcomes and working with physicians and to move them to new areas does require a concerted effort. The other thing we wanted to do is to stabilize and grow again, those existing products that still have market exclusivity for a significant period of time, notably VUMERITY and SPINRAZA. The third thing was to really look at our cost base. Although we had a relatively mature product portfolio, we had one of the higher OpEx to sales ratios among our peer group. And we needed to address that. But more than that, we needed to really reallocate our resources. Fourth was to really look at our research and development pipeline, particularly for the longer term growth outlook. We have really taken a deep dive into research and development, looked at those products, projects that perhaps no longer fulfil their original target product profile, where the practice of medicine had…

Thank you, Chris. This was an exciting quarter for Biogen's development organization with the approval of ZURZUVAE in postpartum depression, as well as important new data presented for LEQEMBI and our tau-targeting ASO, BIIB080, two programs we believe that are critical to expanding Biogen's leadership in Alzheimer's disease. Starting with LEQEMBI, at CTAD last month, Eisai presented new data on a subcutaneous formulation of LEQEMBI. We believe the interim results at six months showed that subcutaneous LEQEMBI was comparable to the IV formulation on the basis of drug exposure as assessed by area [Technical Difficulty] as well as amyloid plaque removal. In terms of safety, we believe the timing, frequency and severity of ARIA-E was similar across IV and subcutaneous formulations. Additionally, overall the incidence rate of systemic reactions with subcutaneous LEQEMBI was also lower with mild symptoms, as compared to first time LEQEMBI IV treated patients from the CLARITY AD core study. We believe these results further support the intent to develop subcutaneous formulation of LEQEMBI and, if approved, may allow for greater patient access, improved compliance and convenience. We've made significant progress in our understanding of the potential clinical benefit that is associated with amyloid removal in Alzheimer's disease. However, there are still very many key questions remaining on how to maximize the clinical benefit with these agents, including when to begin treatment. We believe the differentiated and straightforward design of the CLARITY AD study allowing entry of Alzheimer's patients with confirmed amyloid pathology, but low tau burden allows us to gain additional insights into the clinical profile of LEQEMBI across various stages of Alzheimer's disease. The data show that in the low tau sub population, which represents the earliest stages of early AD, 76% of patients showed no decline and 60% showed clinical improvement at 18 months,…

Thank you, Priya. Good morning, everyone. I'm going to provide some highlights and color regarding our financial performance for the third quarter of 2023. And all the financial comparisons that you'll hear are versus the third quarter of 2022. Total revenue for the third quarter was $2.5 billion. That's an increase of 1% at actual currency and 3% at constant currency. Non-GAAP diluted EPS in the third quarter was $4.36. Total MS product revenue was $1.2 billion. That's a decrease of 14% at actual currency and 12% at constant currency. And that decline is primarily attributable to generic entrants for TECFIDERA, as well as broad competition in the MS market. I would like to provide a few updates to the MS business this quarter. First, in Europe, we continue to see that some generics have not yet fully exited some of the EU markets, and we do believe that there may still be some generic product remaining in the channel. The pace of generic withdrawal has been slower than we expected, but we continue to closely monitor the situation and are working to enforce our legal rights to market protection. TYSABRI biosimilar was approved in the US and EU which we had previously assumed. At this point, we are not expecting a launch this year, but we are aware that there are plans to launch a biosimilar in the first half of 2024. Biogen still has patents relating to TYSABRI and we will continue to enforce our IP. VUMERITY was a bright spot in the third quarter. We did see revenue increase 20%. That was driven primarily by global patient growth. However, we are seeing continued effects from both pricing pressure and an overall contraction of the oral segment of the market in the United States. Next, global SPINRAZA revenue…

Thank you, Mike. So we're already into 2024 in our AOP planning. And as we look to next year, we actually we have a number of milestones, which is nice to see. As I mentioned earlier, we have an EMA decision on LEQEMBI in the EU and in China. We'll have a decision on SKYCLARYS in the EU and QALSODY in the EU, all in the first half of next year. We intend to have two more important regulatory submissions, one for the subcu formulation and also for the IV maintenance dosings, both for LEQEMBI. And then finally, we're actually starting to see some development readouts in the pipeline. We expect the dapirolizumab Phase 3 in SLE in the new year. We have our ASO for sporadic ALS, reading out on a Phase 1/2. A Phase 1 in Angelman syndrome. And of course with Sage, the SAGE-324 program in essential tremor. So I think we'll have a number of interesting news points for next year. And with that, Chuck, I think we can turn it over for questions.

Thank you, Chris. Ally, can we please poll for questions? Thank you.

[Operator Instructions]. And our first question comes from the line of Salveen Richter with Goldman Sachs.

Just on the Reata assets here. Now with the acquisition closed and the launch progressing well, could you just give us your thoughts around key near term value drivers including the launch trajectory, the EMA approval outlook for early next year, and then expansion into the pediatric population?

Actually, when you look at SPINRAZA, SPINRAZA is a good analog. One of the nice things about the rare disease space is that we tend not to be so US centric. So when you look at SPINRAZA sales, it's broadly, not quite, but it's roughly a third, a third, a third between the US, EU and then the international area. And we expect the same really for SKYCLARYS. So we do expect significant value to come out of both EU, but also in Latin America, perhaps some in the Middle East, Turkey, obviously, for genetic reasons. There is none in the Asia region. But we do know that there are quite a few patients, for instance, in Brazil and in Argentina. So we are accelerating our efforts to file for approval in Latin America. On the EU, you never want to try to predict entirely the regulators. We have to respect their decision – ability to make a decision till the end. But everything we've seen so far doesn't really change anything in our view of the probability of this being approved in the in the EU. And that represented, as you may remember, at the time of the transaction, we estimate about a third of the value of the transaction. And then the pediatric study, we are in discussion with regulators. That will be actually quite important because there are a number of patients who start to become diagnosed as early as five or six years old, but certainly in that 8 to 10 year old timeframe. So it's quite important that we get the pediatric study underway.

And our next question comes from Brian Abrams from RBC Capital. We moved on next to Geoff Meacham from Bank of America.

Just had one on LEQEMBI maintenance? When we think about the strategy, I guess the question is, do you have regulatory color on a separate maintenance claim, just given the emphasis on plaque reduction initially? And related to that, would there have to be an additional level of evidence when you think about maintenance with respect to CMS reimbursement?

With regards to maintenance, what I can tell you is that Eisai has communicated that – as you know, we're getting it every four weeks. This is with the intravenous infusion. And this data is expected to be filed by Q1 2024. I won't be able to comment on what it would lead to in terms of indication and such. But we are preparing the data for a potential filing.

Next we'll go back to Brian Abrahams with RBC Capital Markets.

Congrats on all the progress. So coming out of CTAD on subcu LEQEMBI, I realize FDA discussions are still to be had. But can you maybe help us understand your latest thinking as to what's likely to be required for approval? How much, if any, additional patient data do you think you might need to generate at a dose you might go forward with? Might you expect to be able to file for a lower dose based on PK modeling? And maybe you could confirm whether additional patients who are still seeing – flow through the trials there are still seeing exposure below the 125% upper bound?

We are encouraged with the subcutaneous interim data that we shared and Eisai shared at CTAD. Just stepping back, the subcutaneous study was a sub study in the open label extension for CLARITY AD. The patient population that was treatment naïve and where we were really assessing the PK/PD, which was the PK parameters, as well as the PD outcome of amyloid plaque reduction, was a subset of 72 patients. And in addition, the study was set up to gather safety and tolerability in an additional 324 subjects. So the total study population was 394. And what we shared was that we believe that the subcutaneous formulation showed comparability and bioequivalence with the intravenous formulation, and it was between the confidence intervals of 80% and 125% of exposure. What we also noted was that the overall area under the curve was about 11% higher with subcutaneous. And we also noted that there was a 14% increased plaque reduction at the six-month time point. So these are kind of the observations that we have from the data. We have had prior regulatory discussions. And we're now embarking upon additional meetings with the FDA to share the data with them and discuss next steps. So at this point, that's where we are. The plan is, as communicated by Eisai, to file for a BLA by Q1 2024. And that's really the update. Eisai has also commented potentially on a maintenance subcutaneous formulation and filing, but that is much later in the 2025 timeframe. So that's where we are right now.

[Operator Instructions]. We're going to take our next question from Terence Flynn from Morgan Stanley. I apologize. We're next going to now go to Robyn Karnauskas from Truist Securities.

I just want to get a sense of how you think about duration of therapy given your maintenance data. How should we think about modeling how long people might be on drug at this point with the knowledge that you have for LEQEMBI?

Why don't you start with that, Priya, and then I can finish maybe from a commercial point of view?

Just stepping back, as we think about the Alzheimer's disease progression, we know that patients actually have plaque reduction. But we have data from several sources now, LEQEMBI, ADUHELM and others that show that while plaque reaccumulates slowly at a rate of about 3% to 4% based on current understanding annually, the biomarkers actually reflecting disease progression continue to accumulate as soon as patients are off drug, at least with LEQEMBI and ADUHELM. And this is based on the Aβ 42 to 40 ratio, but also other pathological biomarkers. We've also shown most recently at CTAD that actually continuing patients on the 24 month – and we showed data on that, which I also shared in my prepared remarks, we saw that while patients who were on placebo during CLARITY AD study at 18 months and then transitioned onto drug in the open label extension, they never really caught up with the what we call the early start cohort. However, they maintained their difference with the early start, which we believe is a disease modifying effect. And then finally, when we superimpose that with the ADNI data and the natural history data, we see that the patients who even start at 18 months actually maintain some level of stabilization on drugs. So all these areas of evidence point us to the fact that really continuing drugs at this point [Technical Difficulty] is going to be important. You're absolutely right that I think we are still evaluating what is the right frequency and for how long. And that is what the maintenance sub study, which is part of the Phase 2 open label extension is evaluating. And that's the data that we are gathering. But we believe that drug will need to be continued for a certain period of time, and patients will need to be monitored.

More broadly, I would say – I've heard many neurologists say we used to think of Alzheimer's disease as a four to eight year disease, largely beginning with the onset of symptoms. With what we know now, a lot of them are saying we're thinking about this in 25 year terms. We know that patients start to accumulate plaques long before they have symptoms. And as Priya just said that even after you remove the plaques, there seems to be some benefit in continuing therapy. And as we think about that commercially, first, we have this AHEAD study that has launched looking at pre-symptomatic patients. It also raises the importance of blood based biomarkers because that's the only way we're going to be able to detect and diagnose, or at least triage patients initially at an earlier stage. And of course, that's where the subcu formulation also becomes important. Because if we are thinking of people staying on drug for longer, and I'm certainly not suggesting 25 years, but this could be a much longer period, certainly than the 18 months, and therefore the convenience of a subcu formulation is even more important. So we are learning every day. I think we saw that at CTAD. We understand increasingly the importance of early treatment. We're seeing the importance of staying or the benefit of potentially staying on treatment. And so, that has all kinds of commercial implications and how we do more studies and develop different formulations. And it's actually quite exciting.

We're next going to Umer Raffat from Evercore.

I wanted to focus on lecanemab subcu. And, Priya, I think you mentioned two things. One that there's a subcu maintenance filing, which is separate, which could be in 2025. Could you confirm if the dose is lower if it's a single shot instead of two? And also, the FDA interactions on subcu that you mentioned, are they a follow up to previously agreed upon trial design for subcu? Or do you think you need clarity whether plaque reduction alone will suffice for filing?

First of all, I think on the maintenance subcu, that is really a much later potential evaluation and filing. So I won't be able to comment further on that, specifically with regards to dose because we first need to evaluate IV maintenance and that is really the next milestone that's on the docket here. And then going back to your other question of what is the purpose of the FDA regulatory meeting, so maybe just stepping back, Eisai has had a number of meetings with FDA prior to the launch of the subcutaneous open label extension sub study that I spoke about and from CLARITY AD. And so, what we do know is that we do need to show bioequivalence on both PK and then we need to show comparability on plaque reduction. And based on the six month data that we just shared, and Eisai spoke to at CTAD, we believe we have achieved that. And so that's the first part. The second part is with that – because we have an 11% increase with overall AUC, area under the curve, exposure and 14% increased plaque removal, at the six month time point, does that result in a different dose? I think that that is really a matter of discussion, and we would have to discuss that with the FDA. So can't really comment more on that. But most importantly, I think the goal here was to show bioequivalence, which we believe we have achieved.

And next we'll go to Michael Yee with Jefferies.

I wanted to come back to a topic on the AHEAD 3-45 study. I believe that your partner, Eisai, commented there could be an interim analysis based on 400 patients and biomarkers. I notice that it's been enrolling for a while, but maybe it just sort of is picking up steam. Can you just maybe talk a little bit about the progress of that study, how you see that study and the status of patients getting in?

What I can tell you is that it's a very important part – the AHEAD 3-45 study is a very important part of the overall development plan for LEQEMBI as an anti-amyloid agent. And the reason for that, I think Chris mentioned it as well just a few minutes ago, that we know that plaque builds up – amyloid plaque builds up for many years. And then there's sort of a shift where tau tangles start appearing. And then you have the appearance of symptoms. So, over the last several years, there's been a lot of work on clinical staging and such. And we know that the anti-amyloid agents that are currently like – just like LEQEMBI, which is really the only one with traditional approval, is targeting mild cognitive impairment – patients with mild cognitive impairment as well as mild dementia. But these patients already have symptoms and potentially a burden of doubt. The purpose of AHEAD 3-45 is to look at different levels of amyloid plaque in patients who do not have symptoms, and see whether the addition of an anti-amyloid agent like LEQEMBI can alter the costs of disease. So that's really the overarching aim of a study like AHEAD 3-45. It's a very large study. As you can imagine, it's hard to find the patients. But we are very pleased with the progress that the study is making. And as Eisai commented very recently, there is the potential to do an interim analysis and think about whether other regulatory pathways are open with interim data. But we haven't really commented beyond that. These remain possibilities, but I think it will depend on how well we do with the recruitment and what the goals of eventual patient access are.

And next, we'll go to Terence Flynn with Morgan Stanley.

Just a two part for me. Just was wondering if you can provide any more detail on the breadth of prescribing for LEQEMBI? I know you give us the 800 patient number. But if you look at how many centers that's across, that would be helpful. And then I know you made some comments on some progress on the MAC coverage. Any more details on the timelines there for when we might get broader coverage at the MAC level? I know there's a couple of MACs already covering, but anything there would be helpful. Thank you.

Terence, I don't have any real update on the MACs. There's, I think, what, a dozen of them and they're at various stages. I think by the time that's more – that most of them have got there, I think there's an assumption that that takes anywhere from 60 to 90 days to get through. So towards the end of the year. On coverage, it's one of the most interesting things is really just the diversity of situations that we see. I talked to some physicians in some major medical centers. They've got the protocol, they've got the treatments, they're putting patients through on a regular basis. But I've been talking to some major medical centers. You might think they've got this all handled, and they're still thinking about these protocols. And it's protocols around what's the right profile of the patient to put in this. There is a teamwork approach on this. And so, people have to connect on that. For some of the IDMs, they have all of the elements, but they have to connect internally with their MRI centers with the infusion centers. So it's a little hard to give you a broad brush. I would say, every day, we are finding more and more patients, obviously, getting through the course. We are looking upstream at a number of indicators because really revenue is a lagging indicator between – even when we start looking at registry results, it's somewhere between four to six weeks before we actually see those patients going on drug. But some of those timelines are changing constantly. So it's a pretty moving process here. It's just – every day changes. That's where, at some point, we get enough momentum, we get enough of these barriers cleared. One of the biggest is still the getting an appointment with a neurologist. And that's where I think we're looking at what can we do with blood based biomarkers, which are now available not obviously to replace PET scans or MRIs, but can we use them to triage patients, so that those who actually get into a neurology clinic are the ones who are already eligible. So there's an awful lot of thinking right on the fly as we learn from this experience. Again, this is really one where there's – there aren't really great analogs. I know some people try to suggest the CAR T approach. And while that is also a product in a process, the volumes – the scale of this is much different. And we're not obviously anywhere near as complex as a CAR T approach. So for us, there's not really any analogues we can do. And so, we're learning on the fly as we go along. But like I say, every day brings progress. And all of the indicators are in green so far, and it is really just getting enough critical mass now of all the centers who've got these care networks and care pathways in place.

And next, we're going to go to Paul Matteis from Stifel.

Chris, you just mentioned getting an appointment with neurologists. And then earlier in the call, you talked about the registry requirement not being as much of a challenge. I wanted to ask about the other components of the infrastructure here with LEQEMBI, IVs, PET scans and MRIs? How would you rank order these components of the equation as it relates to most and least challenging for centers to navigate? And how do you envision this kind of whole infrastructure network looking by saying next summer?

The situation is a little heterogeneous. It's not quite the same situation in every center. But I would say, based on what we know today, I do think there's clearly, at the moment, the need to get an appointment with a neurologist. The reality is that there weren't that many patients already in neurology practices. They tend to be in PCP practices. And the neurology practices – neurologists were already busy. And we have quite a volume of patients now to put through those neurology practices and a lot of them are realizing, I may be have to staff up on here. Do I have enough business to justify staffing up and not necessarily with neurologists, but perhaps with nurse practitioners, others who can take on some of the parts of the care pathway. For some of them, it's going through their internal governance process and determining which patients, I think, appropriately at this stage. There's clearly an awful lot of caution around ARIA. My personal belief is that, over time, neurologists will become more accustomed to understanding ARIA. Is there a difference between the asymptomatic and the symptomatic? And they'll have a lot more experience but they're looking at making sure that the patients who go through are trying to get to have the least risk of ARIA. I don't think the infusion center capacity seems to be a big issue for most centers. PET scans, there are enough PET scans as far as we can tell. It's really been around how do I get reimbursement for it? Is it just one? And it was more the confusion around – so I think the clarity of that will just take one of the factors of discussion and time out of the process. There is just at each stage – if you send someone out for the PET scan, the scan has got to come back, it's been interpreted by a PET scan reader there, but sometimes a physician will want to have someone in that practice read that. And it's just connecting – sending the patient to all these different points, even if you're an integrated delivery network. So I don't think it's necessarily any one thing, although I would say, if we can do a better job of getting patients triaged even before they can get to the neurologist, that could certainly be helpful. But I think it really is – this is changing, the practice paradigm for a lot of clinics. And they're all having to work through it. And these, of course, are super busy people. They've got other needs. And so trying to fit in the time to actually manage all this is actually a challenge. So I think it's completely natural and expected that this is progressing slowly. But again, you see some who are racing ahead. And that certainly gives me the confidence that others are going to figure this out, too.

We can go to our last question. And that'll be from Phil Nadeau from TD Cowen.

I want to ask about the SKYCLARYS EMA review? Could you give a bit more of an update on what the status of that review is? Has there been a need for a whole explanation? And generally, what's Biogen confidence that a positive CHMP opinion will be secured in the first half of 2024?

Overall, just stepping back during diligence, we reviewed regulatory correspondence. And we had a certain level of understanding of the topics. And subsequent to closing the deal, we have had more regulatory interactions, and nothing has changed our view, as Chris mentioned. We'd still expect to see an outcome in early 2024. So that remains on track. With regard to whether or not there will be an oral explanation, that is really something we don't comment on because it's under review. And that's part of the review details. So I hope that helps.

And this will conclude our call. Thanks, everyone, for joining us today. And the IR team will be available later on, of course, for any other follow-up questions.

Thank you. And ladies and gentlemen, that does conclude today's conference. We appreciate your participation. Have a wonderful day.