Jennifer, the conference operator, welcomes everyone to the Biogen First Quarter 2024 Earnings Call and Business Update. Chuck Triano, Head of Investor Relations, reminds listeners that the earnings release and related financial tables are available on the company's website. He also mentions that non-GAAP financial results will be discussed and that the company will be making forward-looking statements. Other executives, including the President and CEO, CFO, and Head of Development, are also present on the call.

Chris, Alisha, and Mike will make opening comments before moving to a Q&A session. They ask for one question per person to get through as many as possible. Chris thanks his colleagues for their commitment and patience during changes within the company, which have led to earnings per share growth. They are reinvesting and the Fit for Growth project is on track to achieve savings and redesign the organization.

The company has been focused on launching new medicines for multiple sclerosis and has invested a lot of money in these launches. One of the most notable launches is LEQEMBI, which has shown promising results in terms of patient numbers and revenue. However, the launch has been challenging due to the significant changes it brings for physicians and the difficulties in getting patients on treatment. The company has had to make changes in their culture and invest in resources to support the launch.

At another medical center, a five-year business plan is being developed in order to access infusion beds. There has been uncertainty around PET scan reimbursement, but physicians are investing time and effort to overcome these challenges and barriers in order to help patients with neurological diseases. This has led to momentum and quarter-on-quarter growth, although it may not be completely linear. It takes time to establish protocols and comfort with the system before seeing revenue pull through. This launch is unique in that revenue is not a clear indicator of demand, as it takes time for revenue to reflect the upfront investment.

The first quarter has shown an increase in the connection between demand and revenue for the company. This has led to confidence in investing more, including a 30% expansion in the US field force. The launch of a new product in September has been successful, with plans to redeploy resources and introduce new elements to the promotional mix. It is too early to make any forecasts, but the progress is encouraging. Another growth driver, SKYCLARYS, is also showing promising results, with a catch-up population in the rare disease market and efforts to find patients.

The speaker discusses Biogen's strength in rare disease treatment and the success of their drug launch in Europe, with plans to expand to other regions such as Latin America. They also mention the genetic nature of the disease and its prevalence in people of European descent. Alisha Alaimo introduces herself as the leader of Biogen's North American business.

Biogen is experiencing a unique period with the launch of multiple first-in-class drugs in the US, which presents an opportunity for growth and to support patients with Alzheimer's, Friedreich's ataxia, and postpartum depression. The company is taking a tailored approach to provide patients with access to these therapies. Many major health systems are taking a deliberate approach to diagnosis, treatment, and monitoring, with some now expanding their model. The number of patients on therapy has increased significantly in Q1, and a large number of new patients were added in March. The majority of priority IDNs have approved the drug and placed orders, and the number of unique prescribers has doubled. Biogen believes there is still potential for high volume treatment at these sites.

A large health system in the Midwest and a well-known health system in the Southeast have both added LEQEMBI to their formularies, with the latter ordering more units than the former due to scaling processes and expanding to multiple locations. This supports the belief that LEQEMBI has a significant commercial opportunity in the mid to long term. Biogen is expanding its field force and launching marketing campaigns for direct-to-patient and caregiver outreach. SKYCLARYS is also performing well in its rare disease launch.

The company currently has over 1,100 patients on therapy for Friedreich's ataxia, which is 24% market penetration. Efforts are being made to reach more patients, with a focus on educating community neurologists and primary care physicians and engaging with appropriate patients. The company has expanded its field footprint and is using AI to identify potential patients and aid in genetic testing.

The company is encouraged by real-world experiences of patients using SKYCLARYS, which has shown to slow disease progression and improve symptoms. They plan to launch a social media campaign soon to reach more people living with Friedreich's ataxia. The company is also pleased with the launch of ZURZUVAE, with positive trends in provider urgency to treat, growing adoption, and early reports of significant improvement in depressive symptoms. They are working to educate providers on the steps required to prescribe the scheduled product through a specialty pharmacy.

The company is making progress in the treatment of postpartum depression by sharing patient experiences and working with government and payers for access to their medication. The company also has a responsibility to help those with Alzheimer's and Friedreich's ataxia. The company is focused on improving profitability and returning to EPS and revenue growth.

In the first quarter of 2024, the company saw a decline in MS business but this was offset by revenue from four recent launches. Revenue is expected to be higher in the second half of the year due to timing of shipments and expected growth from new products. Gross margin improved due to higher-margin product revenue and cost savings from R&D and SG&A expenses. Non-GAAP operating income increased by 24% and operating margin was 31%. Total revenue decreased by 7%, with MS franchise revenue declining by 4%. VUMERITY revenue grew by 18% due to global patient growth and favorable channel dynamics.

In the first quarter of 2024, Biogen saw growth in TECFIDERA sales in the EU due to the exit of generics from the market. They expect to have market protection in the EU until 2025. Revenue from rare disease drug SKYCLARYS was $78 million, with launches in several European countries. SPINRAZA revenue in the US increased by 1%, while revenue outside the US declined by 35% due to shipment timing and competition. ZURZUVAE had $12 million in revenue, and contract manufacturing revenue was lower due to completing batch commitments. Non-GAAP cost of sales improved by 5 percentage points due to a more favorable product mix and lower idle capacity charges.

The company's first quarter non-GAAP R&D and SG&A expenses decreased due to cost savings from the Fit for Growth program and portfolio prioritization. This led to a 24% increase in non-GAAP operating income and an 8% increase in non-GAAP EPS. The company ended the quarter with $6.5 billion in debt and $1.1 billion in cash and marketable securities, with plans to repay $250 million of the $1 billion 2023 term loan earlier than expected. The company also received a $437 million payment from Samsung.

The company generated strong free cash flow in the first quarter and their balance sheet is in a strong position. They are still exploring options for their biosimilars business and have not received an acceptable offer from a third-party. The company reaffirms their full year 2024 guidance and expects a 5% growth at the midpoint of the range. They have potential R&D success milestone payments and have earmarked the proceeds from a recent sale for business investment or development opportunities. The company's number one goal is to return to sustainable growth and create long-term value for shareholders. The call is now open for questions from analysts.

The speaker provides an update on the progress of LEQEMBI and Priya's initiatives. They mention delays in the CHMP recommendation and the subcutaneous approval due to an ongoing immunogenicity study. They state that their approach is data-driven and they are working with Eisai to provide patients with a subcutaneous formulation. They plan to submit a rolling submission for subcutaneous autoinjector for maintenance as soon as they receive the fast track application. They are also optimizing the dose for more convenience and expect to file for subcutaneous induction therapy by the first quarter of 2026.

Eisai has previously communicated their plans for business development in early March, and they have confirmed that their intravenous maintenance filing will be completed by Q1 2024. They are focused on bringing in new assets in both early-stage research and development, and are looking to diversify beyond their primary focus on neuroscience. They see potential in rare disease and immunology, where they have strong commercial capabilities.

The company is looking to expand through licensing collaborations and is in a good financial position to make potential acquisitions. They have a net debt of $5 billion and generate $3 billion in EBITDA, giving them a capacity of $4-5 billion for potential acquisitions in 2024. The company also has potential for further acquisitions in 2025 and beyond. A question was asked about SKYCLARYS and the company's outlook for 2024, including US market penetration and expectations for uptake in Europe and net pricing. The company has a goal of 24% US market penetration and is optimistic about potential uptake in Europe.

The launch of SKYCLARYS in the US has been successful and the company is now focused on reaching the rest of the population. They have identified two types of patients, those who are highly engaged with their physicians and those who have not been engaged in the past few years. The company is expanding their field force to target these patients and expects to continue to penetrate the market over the next few years. In Europe, the single-payer systems are beneficial for rare diseases.

The speaker discusses the hurdles faced by patients in the US healthcare system and the rapid uptake of a new treatment in Europe. They mention the commercial launch in Germany and plans for future launches in other countries. They also mention a potential launch in Brazil in 2025. The questioner asks about a late-stage lupus readout with a CD40 ligand antibody and inquires about the potential impact of a prolonged duration on B cell activity. The speaker responds by stating that the 48-week endpoint was included in the Phase 3 study based on careful examination of the Phase 2 study.

The company is looking for a meaningful change in the primary and key secondary endpoints for SLE, such as preventing severe flares and achieving low disease activity. They have modified the trial and refined the population to get results quickly. The trajectory of SKYCLARYS revenues for this year will depend on factors such as adding patients and discontinuation rates. The company plans to file for subcutaneous induction for LEQEMBI in Q1 2026.

SKYCLARYS is experiencing a complicated month-to-month situation with their patient population, as they are constantly gaining and losing patients due to various factors such as discontinuation and compliance. However, they are confident that they will continue to add patients every month and lead in the rare disease market. In Europe, they have launched in some countries and are able to charge for early access programs, with full EU revenue expected in 2025. There is some concern from investors and physicians about the sales and marketing presence for LEQEMBI.

The speaker explains that the company's planned 30% increase in their US footprint was part of a stepwise approach, as they wanted to wait for certain indicators before expanding. The initial focus was on top accounts and getting sites up and running, but now they will be expanding to large IDNs that are opening up satellite offices for more patients.

The company believes that the next phase of their build will lead to accelerated growth, with input from third parties and analytics. They clarified that the outcome for the subcutaneous induction is expected by fiscal year 2025. The FDA has requested additional immunogenicity data for the LEQEMBI subcu, and the company is proposing a weekly maintenance dose of 360 milligrams.

The company is in the process of generating a reasonable request and does not expect any issues with bioequivalence. The focus is now on immunogenicity and generating data on patients. The transition from IV to subcu maintenance will be decided with the FDA, based on evidence from a Phase 2 study, GAAP period modeling, and a Phase 3 open-label extension. The company is currently prioritizing its three commercial launches over its R&D pipeline, with four data readouts expected in midyear.

The company is waiting for data before bringing back R&D projects and is prioritizing projects based on conviction and data outcomes. They plan to be more disciplined in their go/no-go decisions and are working on building out their pipeline with outside projects. The company remains excited about their upcoming readouts and is focused on making evidence-based decisions. They are also diversifying away from neurology and are being strategic in their business development efforts.

The speaker discusses the company's focus on diversifying away from MS in their business development activities. They still have programs in MS, ALS, Huntington's, Parkinson's, and other neurology areas, but the unmet need in MS has narrowed. The company sees TAU and lupus as programs of high conviction, but external deals in the CNS space are limited.

The company is not abandoning tough diseases and is proud of their capabilities. They are seeking more predictable results in R&D and plan to expand into rare diseases and immunology. The number of unique prescribers for LEQEMBI has more than doubled and the company expects continued growth through 2024. The IDNs are in different phases and the approval process took about six to eight months.

The company is expecting an increase in the number of physicians prescribing their product due to the opening of new sites for diagnosis and prescription. They are targeting a large number of physicians and are seeing positive results in terms of prescribing and patient duration. Physicians have specific expectations for patients on the therapy and are keeping them on the product. Questions remain about duration, but in the absence of data, physicians are continuing to keep patients on the product. The company's IR team is available for further inquiries.

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