The Biogen Third Quarter 2023 Earnings Call and Business Update is about to begin. The conference operator, Ally, welcomes everyone and explains the call procedures. Chuck Triano, Head of Investor Relations, introduces the speakers and reminds listeners to refer to the financial tables and slides on the company's website. Non-GAAP financial results will be discussed and forward-looking statements will be made. CEO Chris Viehbacher, Head of Development Dr. Priya Singhal, and CFO Mike McDonnell will each make opening comments before moving to the Q&A session. Participants are asked to limit themselves to one question.

Chris Viehbacher, the CEO of Biogen, discussed the company's recent financial results and their progress on their five priorities for sustainable growth. These priorities include focusing on new product launches, stabilizing and growing existing products, reducing costs, and evaluating their research and development pipeline. The company has made significant progress in these areas, including reallocating resources and terminating projects that are no longer promising.

The company has a number of potential growth opportunities, including external growth through acquisitions. The third quarter saw the approval of LEQEMBI for early Alzheimer's disease, ZURZUVAE for postpartum depression but not for major depressive disorder, and QALSODY for ALS. The acquisition of Reata Pharmaceuticals also provides a new growth opportunity, and the launch of SKYCLARYS has been successful and expands the company's rare disease portfolio. The company is also looking to move into other adjacencies, such as rare diseases, to diversify their focus.

The Fit for Growth program aimed to simplify the organizational structure and empower decision-making closer to markets and customers. This resulted in a significant cost savings that will positively impact earnings per share. The launch of LEQEMBI has been gradual due to the need to build care networks and change work patterns within clinics. The recent announcement by the Cleveland Clinic of infusing their first patient with LEQEMBI months after approval highlights the complexity of this pioneering commercial approach. The company aims to reach 10,000 patients by the end of March.

The company is confident about reaching their goal of 800 due to several positive signs, such as increasing intent to treat and patient demand, quick approval and reimbursement from the FDA and CMS, and high P&T approval from top IDMs. Additionally, the recent success of the CLARITY study has dispelled previous skepticism about the effectiveness of removing amyloid plaques, which had led to failed antibody development in the past.

The development of LEQEMBI, an antibody designed to deliver drugs to the brain, has shown promising results in treating Alzheimer's disease. Data from clinical trials have demonstrated its effectiveness in delivering the right amount of drug and its convenience for patients. Further studies are being conducted to determine the ideal patient population for this treatment. LEQEMBI has been approved in Japan and is undergoing review in other global markets. The company remains optimistic about the success of the launch and acknowledges that there are no other comparable treatments currently available.

The speaker discusses SKYCLARYS, a new drug for Friedrich's ataxia, and its success in exceeding other known analogues in terms of patient usage. They mention the challenges of getting patients on the drug, such as reimbursement and genetic testing, and how Biogen is equipped to handle these challenges. The drug has had $43 million in sales in the third quarter and there is a high demand for it worldwide due to its potential to treat a debilitating disease.

Biogen has mobile labs that can help patients who are not near major medical centers get lab tests done and navigate reimbursement. This allows for faster availability of important medicines to patients in the United States. Biogen's development organization had an exciting quarter with the approval of ZURZUVAE and new data presented for LEQEMBI and BIIB080, two programs that will expand their leadership in Alzheimer's disease. At CTAD, new data on a subcutaneous formulation of LEQEMBI showed comparable results to the IV formulation in terms of drug exposure and amyloid plaque removal, with similar safety profiles. This supports the development of a subcutaneous formulation, which could improve patient access, compliance, and convenience. Biogen has also made progress in understanding the potential clinical benefit of amyloid removal in Alzheimer's disease.

The CLARITY AD study on LEQEMBI has shown promising results in treating Alzheimer's disease, particularly in patients with confirmed amyloid pathology but low tau burden. These patients showed no decline or even clinical improvement after 18 months of treatment. Additionally, continued treatment with LEQEMBI after plaque removal may provide a longer term benefit by also removing toxic protofibrils. The 24-month data from the study supports this potential benefit, as the group who continued to receive LEQEMBI showed a sustained separation in CDR sum of boxes compared to the group who switched from placebo to LEQEMBI.

The clinical benefit of early treatment with LEQEMBI is supported by a comparison with the ADNI cohort. There is potential for slowing of decline with six months of treatment. Eisai plans to submit a regulatory filing for maintenance dosing by the end of Q1 2024. Biogen presented new data for their antisense oligonucleotide targeting tau, showing favorable trends in cognition and function. Biomarker data from the placebo control period and long term extension phase were recently published. Tau has long been an area of focus in Alzheimer's drug development.

The Phase 1b study of an ASO targeting tau has shown promising results in reducing tau pathology and potential clinical benefit. Biogen is now prioritizing their pipeline to focus on Alzheimer's disease, with a focus on differentiating LEQEMBI and advancing their ASO targeting tau, as well as other preclinical programs. They also presented new data on aducanumab at CTAD, including from a long term extension and redosing study.

In the third quarter of 2023, Biogen reported $2.5 billion in total revenue, a 1% increase at actual currency and 3% increase at constant currency. Non-GAAP diluted EPS was $4.36. MS product revenue decreased by 14% at actual currency and 12% at constant currency, mainly due to generic competition and market saturation. Biogen provided updates on their MS business, noting that some generics are still present in EU markets. They also mentioned upcoming regulatory outcomes for LEQEMBI and other products, as well as potential long-term benefits of their pipeline programs. The financial performance was presented by Michael McDonnell.

The pace of generic withdrawal for TYSABRI has been slower than expected, but Biogen is closely monitoring the situation and enforcing their legal rights. A biosimilar for TYSABRI is expected to launch in the first half of 2024. VUMERITY saw a 20% increase in revenue due to patient growth, but there is pricing pressure and a contraction in the oral market in the US. Global revenue for SPINRAZA increased 4% and 7% at constant currency, with growth driven by patient growth in the US and timing of shipments in other markets. Biosimilars saw a 4% increase in revenue and 7% at constant currency. Biogen updated how they present commercialization expenses for the LEQEMBI collaboration.

In the third quarter of 2023, Biogen reclassified $39 million of commercial collaboration costs, resulting in an increase to both revenue and SG&A expenses with no impact on the bottom line. This change is meant to increase transparency in reporting and is consistent with industry standards. Eisai reported in-market revenue for LEQEMBI and Biogen's anti-CD20 revenue also increased. Third quarter expenses were impacted by product mix and included costs related to the LEQEMBI collaboration and the close-out of the EMBARK trial for ADUHELM.

The third quarter non-GAAP SG&A expense includes $82 million related to the LEQEMBI collaboration, with a decrease from the previous year due to cost savings initiatives and an increase in commercialization expenses. The company ended the quarter with $2.3 billion in cash and $7.3 billion in debt, with an expected additional $1.3 billion in cash for outstanding payment obligations related to the Reata transaction. The company generated $518 million of free cash flow during the quarter and will use a portion of it to pay down the newly acquired $1 billion of short-term debt. The company is updating its full year 2023 revenue guidance to a low single-digit percentage decline, which is an improvement from the previous guidance of a mid-single-digit decline, taking into consideration the completed acquisition of Reata, regulatory approval for ZURZUVAE, and a modification in the presentation of LEQEMBI expenses.

The company is updating its full year 2023 non-GAAP diluted earnings per share guidance to be between $14.50 and $15, with an expected impact of $0.75 from the Reata acquisition. The company expects some incremental operating expenses and savings from its Fit for Growth program in 2023. However, in 2024, the company will have less cash generating interest income and an increase in debt, as well as potential currency fluctuations that could impact earnings. The company's press release contains other important guidance assumptions, and there is also a brief update on the Fit for Growth cost savings initiative.

The program remains on track to achieve $1 billion in gross savings by 2025, with an expected net savings of $800 million due to the acquisition of Reata and regulatory approval for ZURZUVAE. The figures do not include the impact of LEQEMBI commercial spend, and the estimates do not account for any additional business development or transactions related to the biosimilars business. In 2024, the company expects several milestones, including regulatory decisions and new development readouts in the pipeline.

The company has several ASO programs in development, including one for Angelman syndrome and another for essential tremor. They expect to have significant value from international markets for their SKYCLARYS drug, similar to the success of their SPINRAZA drug. They are also working on getting approval in the EU and expanding into the pediatric population. Overall, they are optimistic about the potential value of their Reata assets.

The company is in discussions with regulators about a pediatric study for their treatment. They are also preparing data for a potential filing for maintenance of the treatment. At the recent CTAD conference, they shared encouraging interim data for their subcutaneous treatment.

The subcutaneous study for CLARITY AD was a sub-study in the open label extension, with a total of 394 patients. The study showed comparability and bioequivalence between the subcutaneous and intravenous formulations, with a slight increase in exposure and plaque reduction. The company is now discussing next steps with the FDA and plans to file for a BLA by Q1 2024. Eisai has also mentioned a potential maintenance subcutaneous formulation and filing in 2025. When asked about the duration of therapy, the company did not provide a specific answer and said that further discussions are needed with the FDA.

Priya Singhal discusses the progression of Alzheimer's disease, noting that while plaque reduction occurs, biomarkers reflecting disease progression continue to accumulate when patients are off drug. Data from LEQEMBI, ADUHELM, and other sources support the idea that continuing drug treatment is important, as shown by the maintenance sub study in the Phase 2 open label extension. Christopher Viehbacher adds that neurologists used to think of Alzheimer's as a four to eight year disease, beginning with the onset of symptoms.

The article discusses the long-term implications of using lecanemab to treat Alzheimer's disease. Researchers have found that patients start to accumulate plaques long before they show symptoms, and even after the plaques are removed, there may still be benefits to continuing therapy. This highlights the importance of blood-based biomarkers and the convenience of a subcutaneous (subcu) formulation. The company is constantly learning and developing new formulations and conducting more studies. There may be a separate filing for a subcu maintenance dose in 2025, and the FDA interactions are to confirm the trial design and whether plaque reduction alone is sufficient for filing.

The speaker cannot comment on the specifics of dosage for LEQEMBI until further evaluation is done on IV maintenance. The purpose of the FDA regulatory meeting is to show bioequivalence and comparability in plaque reduction. The study is currently enrolling patients and there may be an interim analysis based on 400 patients and biomarkers. The AHEAD 3-45 study is a crucial part of the overall development plan for LEQEMBI as an anti-amyloid agent.

The speaker discusses the reasons for conducting a study like AHEAD 3-45, which aims to look at the effects of an anti-amyloid agent on patients without symptoms of Alzheimer's disease. They mention the challenges of patient recruitment and the potential for an interim analysis to explore other regulatory pathways. The speaker also provides an update on the prescribing and coverage of LEQEMBI, mentioning a patient number and progress with MAC coverage.

Christopher Viehbacher, the speaker, does not have any updates on the MACs (Medicare Administrative Contractors) and estimates that it will take 60 to 90 days for them to be resolved. He also discusses the diversity of situations regarding coverage for patients, with some medical centers having protocols in place while others are still figuring it out. He mentions the importance of teamwork and connecting with other facilities, and notes that revenue is a lagging indicator in terms of patient progress. He also mentions the ongoing challenges in getting appointments with neurologists.

The speaker discusses the challenges of implementing blood-based biomarkers for diagnosing Alzheimer's disease. They mention the need to use these biomarkers to triage patients and the lack of analogues for this approach. They also mention the importance of getting appointments with neurologists and the heterogeneous nature of the situation.

Neurologists are busy with a high volume of patients and some are considering hiring nurse practitioners to help with the workload. There is caution around ARIA and neurologists are trying to minimize the risk for their patients. There is enough capacity for infusion centers and PET scans, but there is confusion around reimbursement and the process of sending patients to different points. The practice paradigm is changing and clinics are working to adjust to it.

The speaker discusses the challenges of managing a busy schedule while also trying to progress slowly in a certain area. They mention that some people are able to do it successfully, giving them confidence that others will figure it out as well. They then move on to answer a question about the SKYCLARYS EMA review, stating that there have been no changes to their expected outcome in early 2024 and they cannot comment on the possibility of an oral explanation. The call then concludes.

This summary was generated with AI and may contain some inaccuracies.