The paragraph is an introduction to Biogen's third quarter 2024 earnings call and business update. Cynthia, the conference operator, begins by welcoming participants and mentioning that the call lines are muted to prevent background noise. She then passes the call to Dr. Stephen Amato, Senior Director of Investor Relations, who outlines the format of the call, noting that forward-looking statements will be made and discussing risks. He encourages reviewing SEC filings for risk factors and mentions that related documents and slides are available on Biogen's website. Dr. Amato introduces the speakers, including President and CEO Chris Viehbacher and others, who will be present for a Q&A session. Chris Viehbacher then expresses gratitude to Steve for his efforts during the earnings preparation.

Earlier this week, Biogen announced the retirement of CFO Mike McDonnell and the appointment of his successor, Robin Kramer. Despite lower-than-expected US revenue for LEQEMBI, global revenue grew by 66% from the second to third quarter, with significant prescriber growth. The company continues to enhance its commercial strategy, increasing sales force efforts, and is seeing improved treatment site expansion in the US and a strong uptake in markets like Japan. Biogen is positioned well for the future, with a reduced cost base, successful acquisitions, and a robust late-stage pipeline.

The paragraph discusses the growth and future potential of the drug LEQEMBI, particularly in Japan and China. It highlights the anticipated catalysts for increased uptake, such as intravenous and subcutaneous formulations and widespread use of blood-based diagnostics. Emphasizing the need for innovation at various levels to ensure equitable and timely application of scientific advances, it references an opinion piece in JAMA Neurology about the current significant advancements and challenges in the field. Additionally, it reports on the global expansion and demand for SKYCLARYS, especially in Europe, where it's generating revenue through different methods compared to the U.S., with rising demand across 15 markets outside the U.S.

The paragraph discusses the commercial strategy and success of a product launch in Europe and the US. In Europe, the company is engaging in early access programs to onboard patients while awaiting government reimbursement. This approach does not reflect demand growth but hinges on reimbursement timelines. Patient adoption in Europe has surpassed expectations, with plans to expand access globally through 11 regulatory filings. In the US, ZURZUVAE has surpassed expectations with $22 million in revenue in the third quarter, marking a 49% increase from the previous quarter, partially due to a 40% rise in patients. The company is building new markets, which takes longer than competing in established ones. The focus is on sustainable short and medium-term growth.

The paragraph discusses Biogen's strategic focus on achieving sustainable revenue growth and leadership development for future success. The company is optimistic about its emerging product pipeline, noting significant advancements in biomarker data and clinical trial recruitment, particularly for BIIB080. Positive Phase 3 results for dapirolizumab in collaboration with UCB have led to a prepared Phase 3 protocol. Biogen is targeting areas of unmet need like lupus, with products such as litifilimab and felzartamab, which show promising data in trials. The paragraph emphasizes the promising yet uncertain nature of pipeline development for the company's future growth.

The paragraph highlights Biogen's efforts to transform its business through an enhanced pipeline of potential products, which could significantly increase revenues if approved. Dr. Priya Singhal emphasizes the company's focus on developing impactful medicines, with promising programs in areas such as systemic lupus erythematosus (SLE), Alzheimer's, and other immune-mediated diseases. Key strategies include accelerating decision-making and utilizing AI to optimize clinical trials. Notably, there have been advancements in trials for various drugs, including the completion of enrollment for a Phase 2 trial of BIIB080 and plans for a second Phase 3 study of dapi in SLE, following positive results.

The paragraph discusses Biogen's efforts to advance its pipeline by evaluating external innovation opportunities, particularly in Alzheimer's disease, in collaboration with Eisai. They focus on generating insights about LEQEMBI, emphasizing its long-term effects and real-world evidence, with ongoing regulatory decisions expected by 2025 for its dosing options. They also highlight the progress of the AHEAD 3-45 study, aimed at preventing Alzheimer's, and their commitment to novel treatments for various diseases, including immunology, by developing a robust late-stage pipeline targeting unmet medical needs.

The paragraph discusses the company's recent acquisition of felzartamab and its plans to initiate three Phase 3 studies next year for various conditions. They emphasize their focus on systemic lupus erythematosus (SLE), a condition affecting over 3 million people worldwide, with limited effective treatments, especially for women aged 15 to 24 in the US. Their Phase 3 study of dapi, in collaboration with UCB, met its primary endpoint, showing significant improvement in disease activity compared to a placebo. The study also showed positive results in disease activity and flare prevention, key goals in SLE management. The company used insights from a prior Phase 2 study to successfully design a Phase 3 study, making dapi only the third molecule in 20 years to achieve positive global Phase 3 results in SLE.

The paragraph discusses the presentation of results from two studies at medical conferences. One is a Phase 3 study related to their collaboration with UCB. The other is the DEVOTE study on a higher-dose regimen of nusinersen for spinal muscular atrophy (SMA), which was presented at the World Muscle Society meeting. The higher dose showed faster slowing of neurodegeneration compared to the approved SPINRAZA regimen. It demonstrated significant improvements in motor function and reduced risk of death or permanent ventilation. The results, including those from an open-label study, indicate that the higher dose is generally well-tolerated and has a similar safety profile to the current treatment.

The paragraph discusses Biogen's recent achievements and future plans. It highlights the potential of SPINRAZA for addressing unmet needs in SMA and mentions plans for global regulatory submissions. The company achieved several development milestones, including late-stage readouts in lupus and SMA, and submitted filings for zuranolone and PPD. It also received approvals for SKYCLARYS and QALSODY in Switzerland and China. New data insights were presented in various disease areas at medical meetings. The pipeline is positioned to deliver regular pivotal readouts and potential launches, aiming for sustainable growth. The company seeks to evaluate external innovations to expand its pipeline. The paragraph concludes with Mike McDonnell providing a financial update, noting a total revenue of $2.5 billion for the quarter, down 3%, and a 6% decrease in non-GAAP diluted EPS.

In the third quarter of 2023, Biogen experienced a 4% increase in non-GAAP operating income, attributed to R&D prioritization and Fit for Growth initiatives. Despite a 9% decline in MS product revenue due to competitive and channel dynamics, Biogen's European patent for TECFIDERA was upheld, although further challenges are expected. TYSABRI faces competition from biosimilars in Europe, with increasing competition anticipated in the US. The rare disease franchise saw a 10% revenue growth to $495 million, driven by the SKYCLARYS launch, which generated $82 million in the US and $102 million globally. Meanwhile, SPINRAZA's global revenue fell by 15%, primarily due to losing a significant tender in Russia, impacting earnings by $45 million. Biogen is also raising its full-year 2024 guidance.

The paragraph discusses the financial performance for the third quarter of 2024, highlighting a tender impacting annual revenue and noting no further revenue effects expected this year. It details revenue growth for SPINRAZA, ZURZUVAE, and LEQEMBI, with significant increases compared to the second quarter. Contract manufacturing and other revenue declined, as predicted, due to completing prior commitments. Expenses saw a reduction in non-GAAP cost of sales due to product mix changes and lower idle capacity charges, while non-GAAP R&D expenses decreased due to prioritization initiatives. Non-GAAP SG&A expenses slightly increased, offset by cost savings from the Fit for Growth initiative, which aims for significant savings by 2025. Non-GAAP EPS for the quarter was $4.08.

The paragraph reports on the financial impact of non-operating items, including an $80 million decline in net interest income due to acquisitions, partially offset by $16 million in favorable tax items. The company ended the quarter with $1.7 billion in cash and marketable securities and $4.6 billion in net debt, achieving its highest free cash flow since Q2 2021 at $901 million, aided by favorable working capital dynamics. The company raises its 2024 non-GAAP diluted EPS guidance to $16.10-$16.60, reflecting 11% growth from 2023. Key assumptions include a low single-digit revenue decline, increased investment in new product launches and R&D, and higher SG&A spending in Q4. Additional guidance details are provided in the company's press release.

The paragraph discusses Biogen's focus on advancing product launches and its late-stage pipeline for long-term growth. During a call, Brian Abrahams from RBC Capital Markets asks about the commercial efforts for LEQEMBI and potential acceleration strategies. Chris Viehbacher explains that the product launch began last year and highlights the learning process regarding reimbursement, patient identification, and care pathways. He also mentions upcoming developments like a subcutaneous formulation and further collaboration with Eisai to refine commercial plans.

The paragraph discusses the complexities and progress of a product launch related to neurological treatments. It highlights the teamwork involved and the significant efforts by physicians to manage patient eligibility and necessary medical procedures like PET scans, lumbar punctures, MRIs, and infusions. It mentions steady progress with an increasing number of prescribers and sales. The potential introduction of subcutaneous treatments and blood-based diagnostics could ease the physicians' workload. Alisha Alaimo notes that despite infrastructure challenges remaining a barrier, there has been a 40% increase in new prescribers from the previous quarter, with more physicians joining weekly and Integrated Delivery Networks (IDNs) expanding.

The paragraph discusses the impact of Biogen's strategic hiring and deployment of its field force on expanding its reach in Alzheimer's treatment. By selecting individuals with prior experience and relationships in Alzheimer's and specific geographic territories, Biogen is seeing accelerated growth and improved access to physicians, especially in areas where they have partnered with Eisai. This strategic advantage is evident in regions like the Pacific Northwest and Southeast, where long-standing relationships with physicians have led to rapidly unlocking patient access. The history and relationships of the team members have been crucial in this progress, even though the teams have only been active for a short period.

The paragraph is part of an earnings call discussion involving several speakers, including Stephen Amato, Phil Nadeau, Chris Viehbacher, and Priya Singhal. Phil Nadeau asks for an update on the subcutaneous formulation filings for maintenance and induction. Priya Singhal responds that they are on track with their filing for maintenance and expect the initiation therapy’s regulatory outcome by Q1 2026. Marc Goodman then inquires about pricing and reimbursement dynamics for SKYCLARYS outside the United States (OUS). Chris Viehbacher explains that while they have European approval, they must negotiate reimbursement country by country, with varying processes for generating revenue and getting early access across different countries.

The paragraph discusses the company's current situation concerning revenue and patient demand generation. They're actively enrolling patients in various countries, tracking significant monthly growth in patient numbers. However, revenue from these patients will appear in quarterly numbers once they transition to revenue-generating stages, which can be inconsistent. Early-access programs that involve setting prices can face challenges, particularly if reimbursed prices come in lower than expected, necessitating adjustments. This process is typical in European launches. Chris Viehbacher also addresses business development strategy, highlighting the company's need to bridge the gap between a legacy portfolio facing competition and a promising future pipeline. While they anticipate growth by 2028, current growth levels are not yet satisfactory.

The paragraph discusses the company's strategy for growth through potential acquisitions. The speaker emphasizes that the company is focused on finding assets that can enhance revenue growth and create shareholder value, rather than merely acquiring revenue for its own sake. The process involves extensive research into both public and private companies. Mike McDonnell provides financial context, indicating strong financial capacity with $1.7 billion in cash, a total debt of $6.3 billion, and $2 billion of free cash flow year-to-date. This positions the company with an estimated $8 billion to $10 billion in capacity over the next couple of years to pursue acquisitions and support growth.

In the excerpt, Michael Yee from Jefferies asks Priya Singhal about the timeline and potential interim analysis for the AHEAD 3-45 study, which focuses on early and intermediate stages of amyloid in presymptomatic patients. Priya Singhal expresses excitement over the completion of enrollment for this large study, highlighting that AHEAD 3 involves 400 patients at the earliest intermediate stage, while AHEAD 4-5 involves about 1,000 patients with higher amyloid load. The trials have a 216-week time point. She mentions ongoing discussions with regulators and notes positive findings from the CLARITY study, emphasizing the benefits of early treatment in patients with low or no tau. The discussion is then handed over to Stephen Amato, who moves on to the next question from Umer Raffat of Evercore ISI, who wishes to discuss a different topic.

The paragraph discusses the significant R&D investment in lupus treatments, focusing on felzartamab, a BDCA molecule, and potentially CD38, amidst emerging CD19 CAR-T and bispecific therapies. Priya Singhal emphasizes the excitement around these innovations but points out that these emerging therapies may only be effective in small populations. She highlights the chronic and diverse nature of systemic lupus erythematosus (SLE), stressing the need for a variety of treatment options. She mentions dapi, which targets the CD40 ligand to reduce B and T cell activation, showing promise in current studies, and underscores the importance of continued data generation to support its potential success in broader populations.

The paragraph discusses the development and potential of litifilimab, a drug targeting the Type 1 interferon signature by inhibiting BDCA2, particularly for conditions like cutaneous lupus where innovation has been lacking for 70 years. Chris Viehbacher adds insight from his experience at GSK with BENLYSTA, emphasizing the difficulties and few successful drugs in this field, highlighting the need for multiple treatment approaches. CAR-T therapy is mentioned as promising but currently limited due to logistical challenges. Stephen Amato then moves the conversation to the next question from Jay Olson, who inquires about the $14 billion peak revenue potential from the company's four key pipeline programs.

In the paragraph, Chris Viehbacher discusses the potential and expected contribution of Biogen's product pipeline. While avoiding specific revenue forecasts, he highlights BIIB080 in Alzheimer's as a promising product with significant market potential, emphasizing the growing interest in targeting tau for Alzheimer's treatment. He also mentions the potential of Biogen's products in the lupus nephritis market, such as litifilimab and felza, noting the considerable opportunity for expansion, evidenced by the success of BENLYSTA in the lupus market. With three Phase 3 programs for felza, Biogen sees a substantial opportunity across these areas.

The paragraph discusses the potential for SPINRAZA to return to growth despite recent softer numbers. Chris Viehbacher highlights that, excluding certain international markets, there has been growth in SPINRAZA usage globally, indicating a competitive marketplace where efficacy is key, particularly for severe diseases. The company has found that adding SPINRAZA to ZOLGENSMA gene therapy provides benefits, and notes limitations of oral therapies. The importance of the DEVOTE study is emphasized, as it enables reaching therapeutic levels faster and reduces the number of initial intrathecal injections. Alisha is invited to provide a perspective from the US market.

Alisha Alaimo discusses the strong performance of SPINRAZA in the U.S. rare disease market, noting its excellent efficacy and growth despite competition. She attributes this growth to patients switching back from competitors and the ability to identify new patients quickly using AI and field force efforts. She mentions the company's ongoing preparations for a high-dose version, which is expected to further drive growth.

In the paragraph, Chris Viehbacher discusses Biogen's strategic focus, emphasizing their strong commitment to neuroscience, particularly in neurology and neuroscience investments like BIIB080, LEQEMBI, and other early-stage programs in Alzheimer's, MS, ALS, and Parkinson's. Despite this focus, Viehbacher argues it's not ideal to concentrate solely on one therapeutic area. He highlights Biogen's capabilities in immunology, which align with their MS treatments and the recent HI-Bio acquisition. He also notes the growing importance of immunology and inflammation (I&I) in R&D, ranking second only to oncology.

The paragraph discusses Biogen's emerging opportunities in business development, particularly in immunology and rare diseases. Biogen has strengths in producing small volume, high-value products and seeks to expand in areas where it has commercial advantages without competing against large pharma companies. The focus is on expanding capabilities beyond traditional areas like multiple sclerosis (MS) to include rare diseases and some neurological conditions within immunology. Biogen isn't interested in incremental innovation but sees potential in leveraging its existing strengths and talent. The conversation then transitions to a question from Terence Flynn at Morgan Stanley about operating income margins for 2025, to which Mike McDonnell responds, indicating progress has been made.

The third quarter saw slightly less improvement than expected due to uneven revenue dynamics, though high-margin products like SPINRAZA and SKYCLARYS contributed positively. Year-to-date operating income is up 7%, reflecting a 23% growth year-on-year. The company maintains guidance for mid-single-digit improvement and high teens growth for the full year, expressing confidence in achieving $1 billion in gross and $800 million in net savings to bolster margins. They expect to realize half of the savings by the end of this year and the remainder by the end of 2024, further enhancing margins. Stephen Amato concludes by indicating the availability of the IR team for further questions.

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