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Biogen Inc.

# Biogen Inc. - Q1 2025 Earnings Call

Thursday, May 1, 2025 8:30 AM

# Event Participants

Executives 4 Tim Power, Christopher Viehbacher, Priya Singhal, Robin Kramer

Analysts 9

Brian Abrahams, Evan Seigerman, Salveen Richter, Timothy Anderson, Christopher Schott,

Michael Yee, Michael DiFiore, Terence Flynn, Geo!rey Meacham

# Operator Operator

Good morning. My name is Melinda, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Biogen First Quarter 2025 Earnings Call and Business Update. \[Operator Instructions\] Today's conference is being recorded. Thank you.

I would now like to turn the conference over to Mr. Tim Power, Head of Investor Relations. Mr.

Power, you may begin your conference.

# Tim Power Executive

Thanks, Melinda. Good morning, and welcome to Biogen's First Quarter 2025 Earnings Call. During this call, we'll make forward-looking statements, which involve risks and uncertainties that may cause actual result...

Biogen Inc.

# Biogen Inc. - Q1 2025 Earnings Call

Thursday, May 1, 2025 8:30 AM

# Event Participants

Executives 4 Tim Power, Christopher Viehbacher, Priya Singhal, Robin Kramer

Analysts 9

Brian Abrahams, Evan Seigerman, Salveen Richter, Timothy Anderson, Christopher Schott,

Michael Yee, Michael DiFiore, Terence Flynn, Geo!rey Meacham

# Operator Operator

Good morning. My name is Melinda, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Biogen First Quarter 2025 Earnings Call and Business Update. \[Operator Instructions\] Today's conference is being recorded. Thank you.

I would now like to turn the conference over to Mr. Tim Power, Head of Investor Relations. Mr.

Power, you may begin your conference.

# Tim Power Executive

Thanks, Melinda. Good morning, and welcome to Biogen's First Quarter 2025 Earnings Call. During this call, we'll make forward-looking statements, which involve risks and uncertainties that may cause actual results to di!er materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC "lings, which I encourage you to review.

Our earnings release and other documents related to our results as well as reconciliations between GAAP and non-GAAP results discussed on this call can be found in the Investors section of biogen.com. We've also posted the slides to our website that we'll be using during the call.

On today's call, I'll be joined by our President and Chief Executive O#cer, Chris Viehbacher; Dr. Priya Singhal, our Head of Development; and Robin Kramer, our Chief Financial O#cer. We'll make some opening comments, and then we'll move to the Q&A session. \[Operator Instructions\]

I'll now turn the call over to Chris.

Christopher Viehbacher Executive

Thank you, Tim. Good morning, everybody. Maybe "rst, a warm welcome to Robin. This is your "rst quarter as CFO of Biogen, Robin.

So we had a very good start to the year, a strong quarter. Biogen is really a tale of 2 companies, in my view. There's one company which has been an MS company, and that portfolio, as you all know, has been gradually declining. But there's a new bird, Biogen emerging. And when I look at the rare disease business in AD, ZURZUVAE and LEQEMBI and VUMERITY, we actually have a commercial portfolio that we're actively promoting that's now gotten to be about $45 %$ of our product revenue.

And those products mostly have a very long runway to continue to grow.

And so we've been talking about it for a few years, but I think now this is actually starting to become visible. We're rolling these products out worldwide. We had the approval of LEQEMBI in Europe, for example, which is very important approval for us. But we've also seen the approval of SKYCLARYS in the U.K. and Brazil.

Of course, the next lever of growth is going to be our pipeline. And there, we're very happy to get the FDA Fast Track designation for our ASO targeting BIIB080. That's remarkable since that we haven't actually even read out Phase II yet, and I think is a sign of con"dence in the importance of this potential new medicine in treatment of Alzheimer's. And of course, we've initiated the Phase III TRANSCEND study for felzartamab in AMR.

And of course, we've always said we've got a very strong balance sheet. We're going to continue to patiently and in a disciplined way, augment the pipeline through external innovation. And we're very happy about the partnership that we built with -- on Zorevunersen in Dravet syndrome with Stoke Therapeutics. That's going to be an important medicine. We have that for the territories outside the United States.

Now if we turn to where we are on these new product launches. So LEQEMBI, I mean, look at that, $$ 96$ million, that's almost $$ 100$ million. Now we're into serious product territory. We have, as I said, obtained the marketing authorization in the EU. And it's important not just because of the market potential in the EU.

But now we can say that this is a drug that has been recognized for its importance, its e#cacy, its safety pro"le by all major regulators in the world. And that's an important sign of con"dence. This is, again, the "rst disease-modifying agent that has ever been approved in Alzheimer's. This is a brand-new territory, and I think having that kind of regulatory endorsement is extremely important.

Now as we all know, this has been a challenging product to launch given the workload that this applies for the treating physician. And we're looking very much forward to a number of the innovations that are coming along that we think can actually reduce that workload. First, of course, is one we have in the bag in the "rst quarter, which was the approval for the IV maintenance, which will allow us to reduce the dosing for patients after 18 months of treatment to once per month.

Then we're going to make that even easier for physicians with hopefully an approval in August for the subcutaneous formulation, and that o!ers the potential of at-home administration

with an auto-injector. And of course, in the "rst half of next year, we're looking forward to the approval, hopefully again, of the subcutaneous formulation for initiation, which will dramatically reduce the need for infusion bed capacity.

In addition, of course, this isn't related to Eisai or Biogen, these are independent companies, but they are companies who are pursuing approval for biomarker tests, blood-based biomarker tests. And hopefully, at some point, we'll be able to see those blood-based biomarkers supplant the need for PET scans and/or lumbar punctures.

So there's an awful lot of catalysts coming for LEQEMBI, but we're very much encouraged now that we've got critical mass behind this. We've also launched a new approach on commercialization from 1st of April. We and our partners, Eisai have spent a lot of time going back through the data, thinking about the lessons learned and have adopted our commercial approach. And one of the things, for instance, that we will be doing this year is now starting direct patient engagement in Alzheimer's. Now switching to ZURZUVAE.

This is a product that continues to do nicely with Q1 sales of $$ 28$ million. Since launch, we have now been able to treat 10,000 women with PPD. And the majority of those prescriptions are actually "rst-line therapy for postpartum depression. A lesson that we learned along the way was actually the physician who is the most important in treating postpartum depression is actually not the psychiatrists, but the OB/GYN. So $8 0 %$ of our scripts in Q1, for instance, were from OB/GYNs.

One of the most important things here is you're talking about a one-and-done treatment essentially. And so to make this commercially viable, you actually need to have writers expand, and we did see that. So we were able to expand the number of physicians writing this by $2 0 %$ in Q1. But more importantly, it's getting physicians to write repeat prescriptions.

And one of the most encouraging things is that we're not only seeing the repeat prescriptions, but I think as physicians gain the experience with ZURZUVAE, they're also gaining the con"dence to actually go and be more proactive about diagnosing postpartum depression. And so I think we're actually seeing a virtuous cycle here where this positive response by patients is encouraging a greater attention to a disease that, unfortunately, I think, has been sadly neglected for so many women. So very good progress on ZURZUVAE. We've completed our own "eld expansion at Biogen, and that's been in place since the middle of the quarter.

Now if I turn to SKYCLARYS, we had worldwide sales of $$ 124$ million. That's up $5 9 %$ yearover-year and $2 1 %$ quarter-on-quarter. We did have some e!ect from the IRA. You all know about the Medicare tax that has been put in place, and that had an e!ect. Actually, our gross sales in the U.S.

rose faster than our net sales in this quarter.

One of the things about this disease, of course, is that this is in European origin as a genetic disease. And essentially, where you "nd the patients is where all the European explorers went in the world. And -- but logically, of course, and the biggest number of patients is in Europe. And there, we have had an awful lot of success in "nding patients. It's actually, I think, easier to "nd them in Europe because they tend to be in centers, whereas they tend to be all over

the country in the U.S.

But even in the U.S., our U.S. team has been very creative in thinking about new tools to identify where patients are and "nd them. I can remember years ago with the acquisition of Genzyme, learning the key marketing component of rare disease, and that is "nding needles in haystacks. And that's what this is all about is looking through social media, following family trees and looking for patients.

And so how are we doing on that? If I could see the next slide, you can see that we've got a nice steady growth in patient numbers. We've got about 2,400 patients on therapy globally. It's now available in 26 markets. I would caution that not all of those patients yet are paying patients.

We have had an approach of having early access programs in countries to ensure that patients bene"t from treatment as soon as possible. And we are following up then with negotiations on a country-by-country basis.

But the uptake is very satisfying. When you think about the penetration into this market, as we benchmark this, the penetration is actually much higher than the average analog rare disease launch and actually in line pretty much with the SPINRAZA launch. I wasn't here for that, but as we've gone back and looked at it, the SPINRAZA launch was actually one of the best, if not the best launch of a rare disease product.

So we're very happy with the progress of SKYCLARYS. Brazil approval is actually a very important market for us. There are a lot of patients in Brazil, again, going back to where Europeans went in the world. And having been in Brazil last year and met with a number of physicians, I know that this approval will be very welcome to patients there.

Moving on to the pipeline. I think we made an awful lot of progress here as well. I mean you've heard me say, I think, time and time again that I think we had an extremely high-risk pipeline when I came here. First of all, it was highly concentrated in neuroscience. And that's always an issue when you only have one therapeutic area.

But neuroscience was also a little complicated because we don't always understand the underlying disease biology. The slowly progressing nature of those diseases mean that you often couldn't do a Phase II study, and so you go immediately into a Phase III study. So you end up doing incredibly expensive proof-of-concept studies as Phase III.

Now neuroscience is who we are, and we've not wanted to abandon that by any means. There's huge unmet need. But we did feel that we needed to add another pillar to our company's future growth. And the logical place to go was immunology. We've been in immunology since the founding of our company, particularly through MS.

And I quote my good friend and former colleague, Elias Zerhouni, who often said, we describe too many diseases by their symptoms and not by their cause. And when you get into immunology, actually, what's important is really the immune pathways. And that can lead you into a whole number of di!erent indications. And that is something that Biogen actually understands very well.

And so you can see on the left chart, we've been able to balance this now. We have got a nice balance between neurology, which has been the pride and home of Biogen for many years, but also, I think immunology, where I think we have a very strong right to play. And then, of course, with that concomitantly, if you look at the right chart, in immunology, one of the things you can do is do a proof of concept.

And felzartamab is probably the best example of that. That is an ideal product where we've been able to get a very strong proof of concept. There is never a guarantee in any clinical trial, as all of you know, but I think as we look at the Phase III clinical trials for felzartamab that we feel a whole lot more con"dent about that than some of the other trials where, again, we haven't had that.

And so as you look at our pipeline, I think if I could go to the next chart, "rst thing I would point out, we have 5 Phase III studies that are initiating this year. And that's important from a number of points of view. First is, obviously, there is a huge potential that is behind all of those products, and we're getting into late-stage development. So it's a sign of maturation of our pipeline.

But the second thing is we're also increasing the number of shots on goal. We're not dependent on 1 or 2 projects. And we're going to continue to build that.

And I guess the third thing I would point out is we have a number of data readouts that are coming. And so as we move into Phase III, we'll be able to also have some important readouts already in 2026. And I think that's a nice cadence that is going to help underpin the continued emergence of that new Biogen. So I think very good progress, and Priya is going to talk more about that.

And then I guess the last topic I would just cover is one that I think is on everybody's mind, which is tari!s. It's a new topic for us all. In 35 years in this industry, I've never had to spend as much time as we as a team have on tari!s in the "rst quarter. This is a very complicated area, and I know for investors, this is very complicated.

And I did want to point out a number of features of Biogen, which I think di!erentiate Biogen from some of our colleague companies in the industry. And a number of you have been using, for instance, the tax rate as a surrogate for what the tari! exposure might be. And I would submit to you that, that's actually not appropriate in the case of Biogen. And it's for a couple of important reasons.

The "rst is that when you look at our product sales, $7 5 %$ of our 2024 U.S. product revenue was attributable to products that already have manufacturing operations in the U.S. And in fact, Biogen actually exports more than we import. And as a result also, we also pay an awful lot of tax, and Robin will talk about that, but we pay taxes in the U.S. at federal and state rates.

But the other structural di!erence is that approximately $5 5 %$ of our 2024 product revenue came from countries outside the U.S. Now that's pretty unusual in our business. In most of this industry, what you see is $6 0 %$ to $8 0 %$ of product revenues come from the U.S. Biogen is a whole lot more diversi"ed, and that's really a function of the products that we have.

So as we look out for 2025, obviously, there is an exemption for the moment in place, and we know that the whole tari! situation is changing daily, and it's di#cult to predict. But at least what we can say is even if we lost the exemption and all of those tari!s that were announced by the U.S. administration on April 22 were to actually not only come into being, but also apply to pharmaceuticals, this would still not a!ect our 2025 "nancial outlook.

That's partly because of the long supply chains we have. It's partly because -- and I have to credit our supply chain team. They've built levels of inventory, not just of products, but also of di!erent ingredients and materials because, again, this is a highly complex area. But just structurally, we are more of a U.S.-based company and always have been, and actually, we're quite proud of that.

So with that, I'm going to pass that on to Priya to pick up the story on R&D.

# Priya Singhal Executive

Thank you, Chris. This quarter, we made signi"cant progress advancing and expanding our high conviction late-stage pipeline. We believe our pipeline will play a critical role as we work to deliver sustainable long-term growth, enabled by increased momentum in our data $ow. This includes potential key approvals this year and expected registrational data starting next year.

This quarter, we delivered key milestones across Alzheimer's, immunology and rare disease. First, as Chris mentioned, our tau-targeting ASO, BIIB080, received Fast Track designation from the FDA in Alzheimer's disease in April. Alzheimer's is a complex and fatal disease that we believe will require multiple therapeutic approaches to address its diversi"ed pathologies. BIIB080 is a di!erentiated approach to targeting tau and the Fast Track designation was based on encouraging Phase Ib data, which showed dose-dependent CSF tau reductions, decreases in tau PET signal and favorable trends on exploratory, cognitive and functional measures.

In immunology, we initiated the TRANSCEND Phase III study of felzartamab in AMR. This is the "rst of 3 Phase III studies that we expect to initiate this year for felzartamab with additional studies in IgAN and PMN anticipated by midyear.

And importantly, we expanded our late-stage rare disease pipeline where we acquired rights to Zorevunersen in Dravet syndrome in all territories outside the United States, Canada and Mexico. Dravet syndrome is a developmental and epileptic encephalopathy characterized by severe recurrent seizures and importantly, signi"cant cognitive and behavioral impairments. Importantly, more than $9 0 %$ of patients continue to experience seizures despite treatment with the best available antiseizure medicines and there are currently no medications approved that meaningfully address the underlying cognitive and behavioral aspects of the disease.

Zorevunersen is an investigational ASO that is designed to potentially, for the "rst time, treat the underlying cause of Dravet syndrome by increasing the NaV1.1 protein production in brain cells. What encourages us about this asset is the Phase I/IIa data that we've seen, speci"cally in respect to cognition and behavior as well as seizure.

And looking at the right-hand side of this slide, you can see why. Scores on the Vineland-3, a widely used standardized assessment of behavioral outcomes show that Zorevunersen resulted in substantial improvements across multiple measures of cognition and behavior. This was initially observed within the Phase I/IIa study with continued improvement in the open-label extensions out to 2 years. We believe these results support the potential for Zorevunersen to be the "rst disease-modifying therapy in Dravet syndrome. We look forward to working with Stoke on advancing the Phase III EMPEROR study, which we expect to initiate in the next few months.

We continue to remain focused on advancing the standard of care in Alzheimer's, and I believe we've made signi"cant progress. Starting with LEQEMBI, we are really excited about the recent approval in Europe. We're also continuing to advance the subcutaneous formulation for both treatment maintenance and initiation to further aid patient optionality and convenience.

Furthermore, we believe that the strength of the LEQEMBI real-world data continues to support the urgency to treat symptomatic early AD patients today. And we look forward to the potential of blood-based diagnostics to help remove barriers in the health care system.

I also believe it is important that we continue to execute on the opportunity in presymptomatic AD. Clarity AD established that removing plaque in a symptomatic early AD population leads to clinical bene"t and that symptomatic patients with low or no tau can potentially achieve an even greater bene"t. And we believe AHEAD 3-45 is the right study design to evaluate the potential bene"t of LEQEMBI in a true presymptomatic population.

Beyond LEQEMBI, we continue to treat target Alzheimer's disease biology with the potential next wave of therapies, including BIIB080 and novel delivery technologies. Overall, I'm encouraged by the progress we are making in Alzheimer's and believe we are well positioned to lead the evolution of the treatment landscape.

Turning to the pre-proof-of-concept pipeline. I'm excited again about the progress we've made in rebuilding this area of the pipeline. We are applying a strong scienti"c rationale as we invest in these programs using a disciplined data-driven decision-making approach as we aim to build out a sustainable pipeline with a promising pre-POC pipeline.

During this quarter, we made signi"cant progress in this area, including completing enrollment in the Phase II study for our LRRK2 inhibitor for idiopathic Parkinson's disease with Denali. Applying our approach to follow the science, these Phase II data, which are expected next year, will help provide us with clarity on the potential path forward to Phase III. We will continue to maintain this approach as we work to grow the pipeline by introducing more assets into the early-stage development, both from our organization as well as external innovation sources.

With that, I would now like to hand the call over to Robin for a "nancial update.

# Robin Kramer Executive

Thank you, Priya. I'm pleased to be participating in my "rst earnings call since stepping into the CFO role. I'd like to begin by extending my gratitude to those in the investment community with whom I've had the pleasure of speaking with in my "rst few months as CFO, and I'm

looking forward to spending time with many more of you in the near future.

To start, I would like to provide a few highlights on our "rst quarter "nancial results. Please note the comparisons I'm about to make are versus the "rst quarter of 2024, unless otherwise noted. Total revenue for the "rst quarter of $$ 2.4$ billion was up $6 %$ year-over-year, aided in part by the timing of SPINRAZA and corporate partner revenue shipments. Our 4 launch products delivered approximately $$ 200$ million of revenue in the "rst quarter, an increase of $2 2 %$ quarter-over-quarter and more than doubling year-over-year.

First quarter non-GAAP diluted EPS was $$ 3.02$ , which was down $1 8 %$ . This includes the $$ 165$ million upfront paid in connection with the Stoke transaction, which impacted EPS by approximately $$ 0.95$ in the quarter. Absent that charge, "rst quarter non-GAAP diluted EPS would have been $$ 3.97$ , up $8 %$ year-over-year. In the "rst quarter, we generated $$ 222$ million of free cash $ow, which includes the $$ 165$ million upfront paid to Stoke. We ended the quarter with $$ 2.6$ billion of cash.

Shortly, I will provide an update on our full year guidance.

Now I'll turn to a few comments on revenue and commercial dynamics in the "rst quarter. Starting with our MS franchise, our global product revenue declined $1 1 %$ year-over-year, driven primarily by competition. This included impacts from a biosimilar for TYSABRI in Europe and generic competition for TECFIDERA globally. We have started to see generics launch in certain countries in Europe, such as France and the Netherlands. While we will continue to vigorously defend our IP, we do expect to see further impacts from TECFIDERA generics in Europe this year.

A bright spot for MS in Q1 was VUMERITY, where we saw an increase in demand, and VUMERITY remains the #1 branded oral therapy. For SPINRAZA, we continue to be encouraged by the consistency in demand globally, which includes growth in the U.S. of $4 %$ year-over-year.

In the "rst quarter, ex-U.S. SPINRAZA revenue bene"ted from a onetime VAT refund and the timing of shipments in certain markets, which together was a bene"t of approximately $$ 26$ million versus Q1 of 2024. And as I mentioned earlier, our 4 launch products together delivered $$ 200$ million of revenue to Biogen in the "rst quarter, an increase of $2 2 %$ quarterover-quarter and more than doubling year-over-year.

We continue to see steady sequential growth of LEQEMBI with "rst quarter global in-market sales booked by Eisai of approximately $$ 96$ million, up approximately $1 1 %$ sequentially from the fourth quarter of 2024. Global SKYCLARYS revenue was $$ 124$ million, a sequential increase of $2 1 %$ versus the fourth quarter of 2024, driven by continued geographic expansion outside the U.S. Revenue for SKYCLARYS in the U.S. was $$ 69$ million, impacted by expected Medicare discount dynamics, partially o!set by demand growth. And both ZURZUVAE and QALSODY continued to grow sequentially, driven by increases in demand for each product.

The increase in corporate partner revenue in the "rst quarter was driven by the timing of certain batch commitments related to our contract manufacturing business, some of which was associated with batches of LEQEMBI. We continue to believe that corporate partner

revenue will be roughly consistent when comparing full year 2025 with full year 2024. Due to planned maintenance activities and the timing of batch releases, we expect minimal corporate partner revenue in Q4.

I'll now turn to a few comments regarding expenses. First quarter non-GAAP cost of sales was impacted by increased lower-margin contract manufacturing revenue. Non-GAAP core operating expense or R&D plus SG&A expense decreased $1 %$ year-over-year as bene"ts from our R&D prioritization and Fit for Growth initiatives allowed us to absorb incremental spend associated with our advancing and expanding development pipeline as well as our product launches.

Non-GAAP operating income included approximately $$ 201$ million of acquired in-process R&D charges, including the $$ 165$ million upfront payment made in connection with the Stoke transaction, which had an approximately $$ 0.95$ impact to EPS. Excluding the $$ 165$ million upfront payment, non-GAAP operating income would have been $$ 748$ million, up $7 %$ yearover-year. As a reminder, we and our peers are required to present upfront and milestone charges in GAAP and non-GAAP operating results.

Commencing this quarter, we will break out acquired in-process R&D, including upfronts and milestones in a separate line item in our P&L, consistent with many of our peers. We believe this provides better transparency about our core R&D activities and business development activities. We plan to disclose a schedule of expected charges for each quarter ahead of our earnings calls to aid in modeling.

Now I'd like to provide a brief update on our balance sheet. We generated $$ 222$ million of free cash $ow in the "rst quarter, which takes into account the aforementioned $$ 165$ million upfront payment to Stoke. We ended the quarter with $$ 2.6$ billion of cash and approximately $$ 3.7$ billion of net debt and believe that our balance sheet remains strong, allowing us to continue to invest in both internal and external growth opportunities.

Turning now to guidance, where we are pleased that our expected underlying business outlook for the year has not materially changed. We are updating our full year EPS guidance to re$ect the approximately $$ 0.95$ impact from the Stoke transaction along with $$ 0.20$ of an earnings tailwind from foreign exchange impacts from a weaker U.S. dollar. We now expect our full year 2025 non-GAAP diluted earnings per share to be between $$ 14.50$ and $$ 15.50$ .

We continue to expect total revenue for 2025 to decline by a mid-single-digit percentage, driven primarily by an increased decline in our MS business. We expect that our launch products will generate sequential revenue growth, but we expect the absolute MS revenue decline to be steeper than this growth in 2025.

As a reminder, we expect a potential biosimilar entry for TYSABRI in the U.S., which we believe could occur sometime in the fourth quarter of this year. And as I mentioned a few minutes ago, we have started to see generics for TECFIDERA enter in Europe. And while we will continue to vigorously defend our IP, we do expect to see further impacts from generics in Europe this year.

As I noted earlier, we believe that corporate partner revenue will be roughly consistent when comparing full year 2025 with full year 2024. Due to planned maintenance activities and the timing of batch releases, we expect minimal corporate partner revenue in Q4. We believe we are on track to deliver the $$ 1$ billion of gross savings and $$ 800$ million of net savings under our Fit for Growth initiative. As you can see on the slide, many of our guidance considerations have remained the same as when we guided for the year back in February. I will also refer you to our press release for other important guidance assumptions.

And "nally, a topic of great interest to many investors is the impact to our business from tari!s. Biogen currently does not expect a material impact in 2025 from potential tari!s as announced by the administration -- U.S. administration on April 2, 2025, even if the exemption for pharmaceuticals were to be removed. This is based on both a signi"cant portion of U.S. revenue being derived from products which have manufacturing operations in the United States as well as our current global inventory position.

Our guidance range also considers potential retaliatory tari!s from China as announced. However, the U.S. and international tari! landscape remains uncertain, and our guidance does not contemplate any new tari!s that may be announced in the future.

I will also note that when excluding onetime tax impacts, our tax rate is broadly a function of our business mix and therefore, does not serve as a good proxy for estimating potential tari! impacts. Biogen's e!ective tax rate is a re$ection of our U.S. market revenues being almost entirely taxable in the U.S. at the full federal plus state tax rates. We also generate a relatively high percentage of our revenue outside the U.S., which is taxable in those markets and in the U.S.

under the GILTI regime. We will continue to monitor and analyze the current and future U.S.

and reciprocal tari! landscape as it evolves.

I'll now pass the call over to Chris for some closing comments.

# Christopher Viehbacher Executive

Thank you, Robin. Again, if I come back to where is Biogen going, you just have to look at our pipeline. We've got another 4 Phase III starts that's after the Phase III start already in AMR. We've got 3 clinical trial readouts coming. We've got 3 regulatory decisions coming.

One of the other things I'll say is in this "rst quarter is we did a major restructuring of research, and I'm really quite excited about what we're doing there. As an industry, we rely way too much on late-stage business development. The most cost-e!ective place to do collaborations is actually preclinically, and we have a goal of signing 4 to 5 new research collaborations this year.

Just on research, Biogen has been known for breakthrough medicines. In fact, all 4 products that we launched in 2023 and '24 are "rst-in-class, "rst-ever disease-modifying agents. And we go after some of the hardest-to-treat diseases. But one of the problems about being breakthrough is that you're in diseases where a lot of the investment committee is not already doing an awful lot of research. If I take AMR, the antibody-mediated rejection, for example, there's really no treatment there today.

And so one of the things that I think we feel that we would like to do is do a deeper dive into some of these diseases and pipeline assets, not with the intention of presenting new data, but to just say, okay, what's the competitive landscape? What's Biogen's right to win here? What's the patient journey? What is it going to really take to move the needle on one of these diseases? What's the reimbursement landscape going to be like?

What's the epidemiology?

If I look at AMR, for example, I think this is a huge opportunity for Biogen. And we saw $8 0 %$ resolution of AMR in Phase II trials. So we have a high level of con"dence in that. But of course, a lot of people are interested in IgAN. What's it going to take really to be interested in IgAN?

And I spent an entire day with our West Coast hub just on felzartamab. And there's a huge amount of things going on there. And even things like all CD38s are not created equally. So what are they like?

So we would like to invite whoever is interested to come to some of these thematic seminars. The "rst one we're going to hold on June 11. And hopefully, that will be the "rst of a series. And it's just meant to be educational and a deeper dive, and we'll have some of our top internal experts here on all of these subjects to answer any and all questions.

So with that, Tim, I'll turn it back to you for Q&A.

Tim Power Executive

Thanks, Chris. Melinda, can we go to our "rst question, please?

Operator Operator

\[Operator Instructions\] And your "rst question comes from Brian Abrahams with RBC Capital Markets.

# Brian Abrahams Analyst

Congrats on the recent LEQEMBI approval in Europe. Can you talk about what the rollout strategy could look like there and your sense of what the reimbursement process and amenability could be?

# Christopher Viehbacher Executive

Yes. Thanks, Brian. Well, that is certainly going to take some time. The fact that the approval took a while tells you that there's an awful lot of thought going into that.

One of the things about when you "rst -- when you launch a "rst-in-class, disease-modifying agent is that you're not displacing anything in a budget. So these types of products are incremental adds to the total health care budget of countries. And so that's sometimes where it's easier to launch a product that's kind of a me-too that comes in and can simply cannibalize the budget of another product.

So this is obviously a signi"cant market in Europe. Europe is an aging continent, even more so than the United States. So there are an awful lot of eligible patients. But we'll be taking that with our partners, Eisai, market by market. I do think that also LEQEMBI has run the gauntlet.

I mean there has been a full examination of the e#cacy, the safety, but also the economic bene"t. As you know, the EMA does take into account some aspects of the economic impact.

So I think that in some ways, this deep interrogation by all of the countries of the European Union, by the way, I think should actually, if anything, help us as we go into reimbursement because this has been fully examined and fully evaluated. But I think it will be -- it will still take some time, and we'll go to some of the countries will launch clearly faster as is the case generally in Europe.

# Operator Operator

We go next to Evan Seigerman with BMO Capital Markets.

# Evan Seigerman Analyst

I wanted to touch again on LEQEMBI, but this time with the subcutaneous formulation. Maybe remind us how that potential for at-home administration can help accelerate sales in the United States. We're seeing some good uptake, but I think that, that could really help get things going further. And maybe some of the hurdles that you have to overcome to really get full penetration there.

# Christopher Viehbacher Executive

Right. So the "rst is subcutaneous for maintenance. And these are patients who have been going -- undergoing biweekly infusions now for 18 months. And so I think there are 2 aspects for the commercial. First is we are busy focusing on making sure that physicians and patients understand the need to continue on therapy.

And there, we have long-term extension data, and we have demonstrated that in 36 months after treatment, patients are still doing better on treatment than if they stop treatment. So there's the whole establishment of the maintenance market.

But if these are also older patients, and it's not always easy to get to infusion centers. Obviously, we make it easier with once monthly dosing. But our view is that this is going to be more e!ective as a long-term chronic therapy if you have a patient-friendly administration like subcutaneous. So I think as a "rst step, the subcutaneous really helps establish and extends the treatment life of a patient in maintenance.

And then, of course, in the initiation phase, that will be interesting to see. I think in major urban centers, I think we may see that some physicians may want to continue at least in the "rst few months of therapy on infusion because they're timed with the MRIs to monitor ARIA and then move to subcutaneous. I can imagine in more rural settings where getting to infusion centers is not as easy for patients, that the subcutaneous might even be right from the get-go.

So I think it will depend a little bit on where you are as a patient, but there's no question that this is, again, a simpli"cation of the physician's workload. It's a heavy load to think about the PET scans or the lumbar punctures, going to negotiate for use of the infusion beds, which are often considered to be the domain of the oncologist. And just from a caregiver point of view of bringing the patient to the infusion center, I think this will be welcomed by them as well that they can do this at home. So I think this is an enabler for the patient, but also for the physician.

# Operator Operator

We go to Salveen Richter with Goldman Sachs.

# Salveen Richter Analyst

Just following up on Evan's question here. Could you just speak to your thoughts on LEQEMBI uptick in growth on the forward, not only with subcutaneous maintenance dosing in the second half, but also with Fujirebio's in-vitro diagnostic, which should enter the market as well?

# Christopher Viehbacher Executive

Yes. We don't have that much information about the diagnostic. The process to get a diagnostic approved is di!erent, obviously, than a drug. And then the reimbursement situation is also di!erent.

I do think the recent report by the Alzheimer's Association highlighted the need for early diagnosis. One of the issues that has, I think, been in Alzheimer's is that patients -- most patients are actually seeing their primary care physician, and it can take quite a long time for the physician to distinguish, is this just part of the normal aging process? Is this some other form of dementia? Or is this Alzheimer's? And so 2 or 3 years can go by and sometimes even longer before the Alzheimer's diagnostic is done through a referral to a neurologist.

Now one of the things that, that Alzheimer's report also pointed out is that there's a real interest in getting treatment earlier. And that the earlier you can get to a patient before there has been too much neuronal damage or death, the better. And so I think there is a real e!ort to be done to really get those diagnostics established.

And so the bene"t really is, I think, twofold. One is, hopefully, we can get patients on treatment at a much earlier stage of their disease. And we believe and there's obviously studies ongoing to actually gain the evidence of that, but even the data that we presented at CTAD in 2023 of low tau patients, which is surrogate for early-stage patients demonstrated that $6 0 %$ of patients were stable after 6 months and actually $70 %$ -- sorry, $70 %$ were stable after 6 months and $6 0 %$ actually showed some level of improvement.

So I think the blood-based diagnostics are going to be extremely important. But again, we have to wait and see where those companies are in the regulatory process.

# Operator Operator

Your next question comes from Tim Anderson with Bank of America.

# Timothy Anderson Analyst

On LEQEMBI, how are you seeing the market parse out between your product and Lilly's Kisunla? Because obviously, there's a very big di!erence in terms of commercial positioning around "nite dosing. And I'm wondering who's going to kind of win that battle.

And Chris, you answered an earlier question starting o! talking about getting docs to keep patients on therapy. So the product -- your product is on the market now for coming up on 2.5 years. Are you actually seeing some prescribers take patients o! therapy after a period under the idea that once plaque is gone, you no longer need to give drug?

# Christopher Viehbacher Executive

Yes. I mean I think, "rst, I would say we would really consider the launch of this product to have been September of '23 because that's when we had full approval. We had reimbursement from CMS. In actual fact, we didn't even really get the question on the reimbursement for PET scans clari"ed until about November of that year. So I think we're still much earlier in that launch phase.

To your question on this versus donanemab, it depends on the physician. And I think we're going to see those who like this idea of potentially saying, well, there's a "nite point to this. Equally, what we have seen even at the recent ADPD, once you have a maintenance indication and you start to see the data, you start to realize that, well, actually, once you've -- remove the plaque, you're not done because there is some return of the plaque and potential damage.

So there will be obviously a lot of education to be done to demonstrate the importance of continuing on that. But I think at the end of the day, it's largely going to be up to the physician and the patient. There will be patients where donanemab may be the right answer for them. It depends on their fragility, their age, whether they're in a rural setting or an urban setting. And I think the market ultimately just gets split between us and donanemab.

The most important thing for both Lilly, I think, and Biogen and Eisai is that we start to really expand this market. We've got maybe, I don't know, 12,000, 13,000 patients somewhere in there on treatment, less for donanemab, but they will get there. But when you consider the number of patients who desperately need treatment, we're still only treating a small fraction. And I think that's really got to be the focus of all the companies in this space is to really ensure that more patients bene"t from these disease-modifying treatments.

# Operator Operator

Next up is Chris Schott with JPMorgan.

# Christopher Schott Analyst

I just would love a bit more elaboration on latest thoughts on business development in terms of the size and scopes of deals you're considering. It's obviously been a pretty volatile market out there. And I'm just wondering if that's changing your views at all or the range of opportunities that might be available to Biogen.

# Christopher Viehbacher Executive

Yes. Thanks for that question. I mean I think there is -- there has been a shift even perhaps in the last, I would say, 4 to 6 weeks. In a couple of ways, I mean, valuation is one thing, but you're still really focused on getting the right thing. And what I think has changed is you have a lot of health care investors who are facing a lot of pressure from LPs.

And I think they are looking for liquidity. And I think we've had a lot of companies who not really wanted to do much because valuations are low. But we're also "nding that there's a lot of companies who are struggling to get "nancing.

So I think if you're looking to acquire, I think there might be a little bit more of an ease in actually getting at least into a discussion. But I think even from a collaboration point of view, I think one of the things we're going to see, and I think this is also where we're doing this in the early research collaborations, I think companies will be able to provide some of the funding as some of the venture capital and some of the other sources of funding dry up for other companies. And so there are opportunities in there.

It still requires an awful lot of patience and discipline to work your way through and "nd companies that work together. I do think Biogen is actually well positioned. One of the things I'm particularly proud of is we have this West Coast hub, which is essentially the HI-Bio team. And we have been able to retain virtually everybody in that HI-Bio team. Jane has hired our Head of Immunology, came from BMS, who's out there on the West Coast, and we're building out that team.

And so I think Biogen, just because of our own biotech roots is a company that knows how to do collaborations and I think can be a trusted partner in this. So I do think this is an opportunity. But again, and we look at a lot of things, but even in this environment, you still have to stay disciplined.

# Operator Operator

We'll go to Michael Yee with Je!eries.

# Michael Yee Analyst

I wanted to ask Priya, about the early AHEAD 3-45 study. I know that you've guided to a 2028 readout. Your competitor is also guiding to a readout, although I think there's an assumption that, that may come earlier. Can you just talk about maybe 1 or 2 points about your positioning versus that study and particularly what would get you extremely con"dent that, that's going to work and/or readout? Because I know that you have an interim, but I'm just going to assume you're not going to take that interim.

# Priya Singhal Executive

Yes. Thanks, Mike. So overall, I would say I'd like to start by saying that with Clarity AD, we established that LEQEMBI clears plaque and that translates to clinical bene"t. Now with regards to the presymptomatic Alzheimer's disease area, it's a big spectrum. And we believe that AHEAD 3-45 is truly positioned to provide a comprehensive understanding and evaluation of how LEQEMBI can preserve cognition across the full spectrum of presymptomatic AD.

And the reason for that is that we are testing it in 2 parallel trials.

The "rst one is AHEAD 3, which is about 400 subjects and really by the inclusion criteria are

20 to 40 centiloids of amyloid. And then the other trial is greater than 40 centiloids, which is the AHEAD 45, amyloid levels. And there, we are looking at whether it can prevent cognitive decline. So AHEAD 3 is looking at can we stop the accumulation of amyloid, has amyloid PET as the primary endpoint. And then AHEAD 45 is looking at preventing cognitive decline, and we have a very sensitive clinical endpoint called the PAC5 along with amyloid and tau PET.

I think in contrast, TRAILBLAZER-ALZ3 is really evaluating whether donanemab can slow clinical progression in a mixed population. And this is based on their baseline CDR global scores. So presymptomatic is about $5 5 %$ , and they have included $45 %$ of symptomatic patients. So these studies are actually quite di!erent, and we are looking at the entire range of presymptomatic patients with varying degrees of amyloid.

We will -- we do expect -- we're fully enrolled. We do expect to read out in 2028. We always reserve the optionality of looking at data earlier or such, but we're not commenting on that. Right now, we are looking at a readout in 2028.

# Christopher Viehbacher Executive

And I think if I could just from a commercial point of view, I do think the AHEAD study will actually answer much more of the question that physicians will be looking to ask. I mean if you're in presymptomatic patients, these are otherwise healthy people, right? And the riskbene"t equation becomes di!erent at that point. And there is ARIA that is associated with both products.

So you're going to have to answer the question about the risk/bene"t of treating earlier and at what level of amyloid burden. And I think that's going to be useful because the bloodbased diagnostics will tell you that if there is a presence of amyloid, they will not tell you about how much.

So at some point, you sort of say, 55, you had a positive blood test, someone is going to send you for a PET scan to see how much amyloid you have. And let's say you're at 50. Well, are you in a watch-and-wait mode? Or do you actually treat? And unless you've actually done the study of looking at the full spectrum of amyloid burden, I'm not sure that physicians are going to feel comfortable about treating.

So I do think actually AHEAD 3 and 45 are going to be really landmark studies in Alzheimer's.

# Operator Operator

We'll go next to Umer Ra!at with Evercore ISI.

# Michael DiFiore Analyst

This is Mike DiFiore on for Umer. Again, one on LEQEMBI. Lilly's drug did about $$ 20$ million -- $$ 21$ million of sales in Q1, which is its second full quarter of launch. And this tracks slightly ahead of LEQEMBI sales at the same time point. So my question is, has Biogen and Eisai perhaps paved the way for Lilly in terms of opening up health care infrastructure?

And maybe perhaps could you speak to any competitive dynamics at play now that you're roughly 18 months into launch.

# Christopher Viehbacher Executive

Well, I think the answer is probably yes. Clearly, there's been a lot of hard work, particularly the IDNs to work through all the treatment pathways and protocols and treatment regimens that are needed. And so then now we're into a question of lecanemab versus donanemab in those questions. And as I said earlier, I think there will be cases where physicians are looking at both products.

I think it will be a question of who gets initiated. I don't think we're seeing any switching going on here. So it's really a question of which one are you going to start on and then stay on. I think the bigger question is, can we actually collectively grow the market. And that's really what's most important.

And I don't think we particularly want to get into just trying to duke it out over market share in a relatively still small market. There is -- there are a lot of patients out there, and we are not yet doing a full service to patients who are su!ering. And so the more that we can get more centers up and running and better education, the better it will be for patients and actually for both companies.

# Operator Operator

Next up is Terence Flynn with Morgan Stanley.

# Terence Flynn Analyst

Obviously, there's been a lot of focus on the FDA under the new administration. And I know you made some comments about your Dravet program moving into a Phase III. So just wondering if you could comment high level, number one, on your interactions with FDA and if there have been any changes to the review teams, things like that. But then also in some of these rare diseases, do you think this FDA is going to be advancing very rapidly and be more favorable to the industry in terms of thinking about maybe surrogate endpoints?

# Priya Singhal Executive

Yes. Thank you. Overall, I'll just make a high-level statement that based on our interactions on review meetings and requests, we're not really seeing any changes at a high level. Currently, we remain on track with our engagements.

And with regards to Dravet syndrome, I think that obviously, the data that we saw during diligence and which I spoke to as well today, for us, that has been very compelling. That has been -- it has several aspects to it. First of all, this population, although it was a small openlabel trial, I think what was important about it was that these patients were on standard of care. And unfortunately, the burden of disease is high in Dravet. And they have a number of seizures, sometimes 7 to 10 a week.

And they are on multiple medications, antiseizure medications.

And in fact, we saw the impact of Zorevunersen on top of standard of care. So the impact that we saw was $8 7 %$ seizure reduction on top of background standard of care, full standard of care. And then that was durable out to about $7 6 %$ when you look out 6 months. So that -- the

data was important.

But the other aspect to the question that you asked is that Stoke had already engaged with FDA, Europe and Japan. So we have regulator input, which we have evaluated carefully. We have agreement on the approach and design to the Phase III EMPEROR trial. So we remain fairly con"dent that this is the right trial to conduct.

And so we remain encouraged about where we are in our engagement, not only with the FDA, but global regulators and that the design is appropriate to really give us that answer on what we hope will be a disease-modifying therapy impact on -- in this population.

# Christopher Viehbacher Executive

But I think to your broader question, I think certainly, right now at Biogen, we have not really seen any delays in our interactions with the FDA. And I personally am encouraged by some of the more recent comments by the new commissioner about particularly ultrarare and thinking about surrogate markers and making sure patients get drugs earlier.

And I think he seems to be more interested in innovating some of the process, I think about his statements on reducing the use of animals in studies, for example, and use of AI. So there's certainly a lot of change going on at the FDA, and we're watching very carefully. And obviously, there's been some key leaders who have left and some reduction in sta!. But I'd say so far, at least from a Biogen point of view, we haven't seen any adverse e!ect to that. And perhaps some of the new perspectives of the new commissioner, Makary could actually be helpful to us.

# Tim Power Executive

I know it's a busy morning, so maybe we can squeeze one last question in here. Our last question, please.

# Operator Operator

We go next to Geo! Meacham with Citibank.

# Geo!rey Meacham Analyst

For Chris or Robin, on manufacturing, Biogen has historically had a lot of capacity in the U.S. going back to the original expectations in Alzheimer's. I guess the question is, as we see more companies in biopharma announce plans to onshore capacity, do you guys view your own capacity or resources di!erently? I wonder if there's a short-term opportunity to partner that's not in the model. Obviously, all, of course, depends on what you have in excess.

# Christopher Viehbacher Executive

Yes. We've actually recently -- our main facility in Solothurn, for example, we've recently -- there, we're actually doing CDMO business to absorb capacity. Obviously, that doesn't help for someone looking in the U.S. In RTP, we actually do quite a lot of manufacturing already for third-party companies. And I think even before I joined Biogen, I knew of the reputation of our RTP facility.

It's a very high-quality, very e#cient site. So yes, I think we certainly will be open and looking for opportunities on that front.

# Robin Kramer Executive

Yes. We have a good mix in both facilities between our own product manufacturing as well as those for partners.

# Tim Power Executive

Well, thanks for your time, everybody. Really appreciate it. And if you've got more questions later today, just reach out to the IR team. Thank you.

# Operator Operator

This concludes today's conference. We thank you for your participation. You may disconnect at this time.