The conference operator, Anna, introduces the Biogen Second Quarter 2024 Earnings Call and Business Update. Chuck Triano, Head of Investor Relations, welcomes participants and reminds them of the risks involved in forward-looking statements. He also mentions where to find the earnings release and other documents related to the results. The call will include opening comments from CEO Chris Viehbacher, as well as updates from Alisha Alaimo, Dr. Priya Singhal, and Mike McDonnell. A new team member, Dr. Travis Murdoch, will also be introduced. Participants are asked to limit themselves to one question during the Q&A session.

Travis, a physician and CEO of HI-Bio, has joined Biogen and will collaborate with the East Coast team to develop felzartamab. Despite facing setbacks, Biogen has successfully transformed itself in the past 18 months, with a focus on new launches, reducing costs, investing in promising assets, optimizing the portfolio, and pursuing external growth. The new launches are meeting or exceeding expectations, particularly LEQEMBI in the US, Japan, and China.

Last year, the company successfully reduced its cost base and improved margins, while also investing in growth opportunities and key assets in R&D. This includes BIIB080 and litifilimab. Despite increased competition in the MS market, SPINRAZA and VUMERITY have performed well. The company is also open to external growth, as seen in the Reata transaction.

The company is experiencing a strong launch of their product in both the US and Europe, with plans for approval in 20 countries by the end of the year. This is due to the company's focus on developing a sustainable growth platform, with a prioritization of R&D in their Alzheimer's portfolio. They are also investing in other modalities, such as tau, for the treatment of Alzheimer's, and have an emerging lupus portfolio with potential treatments for SLE and lupus nephritis. The company remains optimistic about their future growth potential.

The acquisition of HI-Bio is significant for the company's long-term growth and provides a more balanced portfolio. Business development is also a focus for future growth. The company has seen successful launches with LEQEMBI, SKYCLARYS, and ZURZUVAE, with sustained new patient growth and an increase in prescribing physicians. The company is well-positioned for future growth.

In the second quarter, the ordering of our priority 100 IDNs increased significantly, demonstrating sustained launch progress. There are also positive signs that health system capacity is increasing, with many IDNs expanding their sites of care. This real-world experience with LEQEMBI's efficacy and safety strengthens its unique profile in a competitive market. The drug's ability to remove plaques and prevent ongoing damage in Alzheimer's patients is supported by long-term data, and recent data shows continued benefits in patients who have been on continuous treatment for three years.

The FDA has stated that the incidence and timing of ARIA vary among drugs in the class, with LEQEMBI having the lowest reported rates. Biogen has deployed an expanded field force to reinforce LEQEMBI's unique profile and has seen positive feedback since its launch. The company's field force is working closely with partner Eisai to deepen customer insights and enable accelerated growth. Biogen also continues to see strong launch momentum for SKYCLARYS, with $100 million in revenue globally and ahead of internal expectations. The drug is now available in 12 markets outside of the US and the team is leveraging their rare disease capabilities to engage patients and physicians.

In the second quarter, one-third of new patient start forms were from new writers tied to the AI program. The company anticipates strong growth in both the short and long term with the availability of SKYCLARYS in additional geographies and potential expansion into pediatric populations. ZURZUVAE has outperformed expectations in the first six months of launch, with strong growth in the second quarter and high awareness among providers. The company is working to understand the patient opportunity in the postpartum depression market. They remain on track or ahead of expectations for all three therapies and are focused on improving the risk profile of their existing pipeline.

The company's focus is on building their pipeline through internal and external opportunities, with a focus on risk diversification and creating value. They are also investing in Alzheimer's disease, with their product LEQEMBI showing promising results in clinical trials. At AAIC, they presented three-year data from their Phase 3 study, showing continued clinical benefit with longer duration LEQEMBI treatment. This includes data from different patient groups and a baseline matched natural history cohort, showing a clinically meaningful benefit for early AD patients.

The paragraph discusses the importance of the CDR score in measuring impairment and independence in Alzheimer's disease. It also presents data from a Phase 2 study showing that the disease continues to progress even after plaque removal, and that early treatment with lecanemab may have a positive impact on disease progression. The company is focusing on characterizing dosing and evaluating the drug's role in preclinical AD, and is disappointed by the negative opinion from the CHMP but believes the clinical data supports its efficacy and manageable safety profile. They are working with Eisai to request a re-examination of the EU filing in order to provide access for patients globally.

Biogen is investing in their Alzheimer's pipeline, including their anti-tau ASO BIIB080, and have amended their Phase 2 CELIA study to potentially accelerate results. They are also focusing on diverse targets and modalities, such as active transport approaches, under the guidance of Jane in research. They have decided to exit a collaboration with Denali but still prioritize modalities that can actively transport therapeutic agents into the brain. They have made progress in other areas of their pipeline, including the first patient receiving a dose of SKYCLARYS in a Phase 1 study for pediatric Friedreich's Ataxia and the first patient being dosed in the litifilimab Phase 3 portion of the Amethyst study in CLE. They view immunology as a significant potential driver of Biogen's future growth and recently acquired HI-Bio as an example of this importance.

Travis Murdoch, a member of the Biogen team, is excited to discuss the potential of felzartamab, an anti-CD38 antibody. He believes that Biogen's expertise in immune mediated diseases combined with their global development and commercial experience will be beneficial in accelerating felza into late stage development. Felzartamab has a unique molecular design that targets and depletes plasma cells responsible for producing harmful antibodies, while sparing other cells. This specificity may lead to a more effective and safer treatment compared to other programs in development. Felza has already shown promise in clinical trials for rare immunology conditions, such as AMR, IgAN, and PMN, which have limited treatment options and significant unmet needs. This presents a significant commercial opportunity for Biogen.

AMR is a major cause of kidney transplant loss in the US with no approved treatments. However, a Phase 2 study showed that felza IV treatment resulted in over 80% resolution of AMR at week 24 and two-thirds of responders maintained resolution at 52 weeks. In IgA nephropathy, felza directly depletes CD38 positive plasma cells, resulting in durable reductions in IgA levels for up to 24 months after treatment. This selective effect on IgA could potentially impact disease biology while maintaining general protective immunity conferred by IgG and IgM antibodies. Preliminary results from the Phase 2 IGNAZ study also showed a durable reduction in proteinuria.

The results from the Phase 2 M-PLACE study showed a significant reduction in UPCR after 18 months of being off therapy, demonstrating felza's potential as a non-chronic treatment option for IgAN. The drug also showed a good safety profile and a wide therapeutic window, which could be beneficial for IgAN patients. In PMN, a severe antibody mediated kidney disease, felza showed promising results in reducing anti-PLA2R antibodies in both newly diagnosed and relapsed patients, as well as those refractory to current treatments. The treatment effect of felza was durable, with many patients maintaining immunologic complete response for more than six months after stopping treatment.

In the paragraph, the speaker discusses the positive results of a recent study on felza, a potential treatment for patients suffering from PMN. They mention that the study showed a reduction in anti-PLA2R and proteinuria, and that felza has the potential to be a best-in-class treatment option for multiple immunologic diseases. The speaker also mentions plans for Phase 3 studies and acknowledges the strong second quarter performance of Biogen, with total revenue and core pharmaceutical revenue both increasing. They note that non-GAAP diluted EPS grew significantly, but that this included a one-time benefit from the sale of a priority review voucher.

In the second quarter, the company saw a 43% improvement in non-GAAP operating income, with a 30% improvement excluding the sale of a PRV. The company's R&D prioritization and fit for growth initiatives have been beneficial. The company has raised its full year 2024 guidance range. In terms of revenue, the MS franchise declined by 5%, with the interferon business seeing erosion due to a shift to higher efficacy oral therapies. TECFIDERA saw growth in the EU as most generics have exited the market. VUMERITY had its best quarter since launch, while TYSABRI revenue declined due to competition. The rare disease franchise saw growth of 22%, with SKYCLARYS and SPINRAZA bringing in $100 million and $429 million in revenue, respectively. LEQEMBI saw significant sequential growth with $40 million in global in-market sales, including $30 million in the US.

The company saw lower non-GAAP cost of sales as a percentage of revenue in the second quarter, driven by a more favorable product mix and no idle capacity charges. R&D expenses decreased by 21% due to a focus on programs with higher success probability, while SG&A expenses increased by 1%. The company ended the quarter with $1.9 billion in cash and marketable securities, and $4.4 billion in net debt. They generated $592 million in free cash flow in the second quarter and have $1.1 billion in free cash flow in the first half of 2024. The company believes their balance sheet has the capacity for internal and external growth opportunities.

The company is pleased with their operating performance and is raising their full year 2024 non-GAAP diluted EPS guidance. They expect a 9% growth at the midpoint of the range compared to 2023. Revenue is expected to decline by a low-single-digit percentage, with core pharmaceutical revenue being roughly flat. The sale of a priority review voucher will not impact EPS, and there will be increased launch spending and incremental OpEx in the second half of the year.

The company expects full year 2024 non-GAAP R&D and SG&A expenses to be around $4.3 billion, with higher expenses in the second half of the year due to new product launches and typical phasing of expenses. Operating income is expected to grow at a mid to high teen percentage, with a reduction in interest income due to the HI-Bio acquisition. The company has decided to retain its biosimilars business and optimize it for maximum profitability. The call is now open for questions from analysts.

The company is focusing on 2024 as a turning point for growth, with a focus on product launches and cost savings. The guidance for this year shows a 9% year-over-year EPS growth, indicating a turnaround from previous years. The company's mission is to achieve sustainable growth in both top and bottom line. They are pleased with the progress of their launches and are hopeful that 2023 was the trough year for earnings. The company will have more to say about future years as they move forward.

The speaker, Priya Singhal, expresses disappointment in the negative opinion for LEQEMBI from the EMA. They plan to submit additional evidence on efficacy and safety from trials and real-world data for a reexamination process. They believe the issues driving the decision are addressable with the data they have generated, including long-term data and real-world data from thousands of patients.

The company is working closely with Eisai on the reexamination process and may appoint a new SAG-N to speed up the process. The company has opted out of the Angelman Syndrome Program with Ionis and has a process for evaluating partnerships. They prioritize programs with clear and compelling data, biomarkers, regulatory pathways, clinical tractability, and confidence in regulatory endpoints. They also consider the ability to launch products globally.

The speaker discusses the level of evidence and regulatory endpoints that are acceptable to payers and regulators around the world, not just in the US. They also mention updates on subcutaneous induction dose optimization and its potential impact on the application in Europe. The goal is to provide options for patients and continue with the reexamination process. A question is then asked about LEQEMBI.

The company has conducted market research with neurologists and Alzheimer's specialists, which has shown a less favorable view of the risk/benefit and cost/benefit ratios for their drug, LEQEMBI. Some physicians are also questioning the amyloid hypothesis. The company's representatives in the field are experiencing pushback from some physicians who were initially ready to prescribe the drug after approval, but are now hesitant. However, the company points out that the physicians who are currently prescribing the drug are the ones they have been working hard on over the past year, and they are seeing an increase in uptake as other physicians see this happening. The company believes that understanding the data is important in this situation.

The speaker believes that understanding the mechanics of diagnosing patients and setting up their treatment is important. They have not heard any pushback about the cost/benefit of the treatment. The real world experience of physicians is showing the positive impact on patients and caregivers, leading to an increase in physicians prescribing the treatment. The speaker pays more attention to what physicians do rather than what they say, and sees the investment of time and energy by physicians as a sign of their strong conviction in the treatment. They are encouraged by the growth of the market and the evidence base being built with their partner. The speaker believes that the market will continue to grow, especially with the AHEAD study showing the benefits of treating patients earlier.

The speaker discusses the progress of market building and the entry of Lilly in the marketplace. They are pleased with the current dynamics of SKYCLARYS and do not see any concerning rates of discontinuation or lack of efficacy among patients. Physicians have been effective in setting expectations for patients regarding the medication.

The field teams at Biogen are doing a good job of educating both physicians and patients about their product and the importance of staying on it for at least a year. As they continue to identify new patients, they are seeing promising results with their new AI engine, which helps them reach patients more efficiently. Biogen's appetite for business development has evolved over the past year, with their current focus being on transactions worth around $10 billion. They are open to larger transactions, such as the recent Reata deal, and are interested in various therapeutic areas and types of assets.

The CEO of Biogen discusses the company's focus on rare diseases and immunology, as well as their high scientific and medical capabilities. They are currently on a growth pattern and are looking for potential acquisitions, but are not desperate to make a deal. They prioritize launching more products and are picky about where they look, avoiding overpaying in auction processes.

The CEO of Biogen discusses the company's size and its advantage in acquiring assets. They are looking for opportunities to bring in more assets at an early stage to create shareholder value. The company is also working on collaborations and has an upcoming data readout for a lupus treatment, which they are excited about. The results will be from a Phase 3 trial in collaboration with UCB.

In this paragraph, Chris mentions that this call is a high point in his time as CEO, as the company has successfully implemented various initiatives. He also mentions that they are conducting a study on the safety and efficacy of dapi as an add-on to standard SLE therapy, with a focus on the BICLA assessment. If the results are positive, they may need to run another Phase 3 trial. Overall, the company is optimistic about the potential impact of their work on patients with SLE.

Chris Viehbacher, CEO of Biogen, was asked about the challenges the company is facing. He stated that there are still threats to their MS franchise, such as potential biosimilars and patent litigation. However, he believes that the company has a talented team and capital to overcome these challenges. They have been able to transform passive capital into active assets, such as selling a priority review voucher and using the funds for business development. He also mentioned the acquisition of HI-Bio and the company's ability to change its trajectory through smart investments and utilizing their talented workforce.

The speaker discusses the company's plans for the future, including a focus on building their R&D portfolio and investing in innovation. They believe they are in good shape for growth in the next 5-10 years and will continue to deploy capital with discipline to drive active growth. A Q&A session follows.

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