Document Details

**Operator** (Operator):
Good morning. My name is Jennifer and I will be your conference operator today. At this time, I'd like to welcome everyone to the Biogen Fourth Quarter and Full Year 2024 Earnings Call and Business Update. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. 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** (Head of Investor Relations):
Thanks, Jennifer, and good morning and welcome to Biogen's fourth quarter and full year 2024 earnings call. During this call, we make forward-looking statements which involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review. Our earnings...

**Operator** (Operator):
Good morning. My name is Jennifer and I will be your conference operator today. At this time, I'd like to welcome everyone to the Biogen Fourth Quarter and Full Year 2024 Earnings Call and Business Update. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. 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** (Head of Investor Relations):
Thanks, Jennifer, and good morning and welcome to Biogen's fourth quarter and full year 2024 earnings call. During this call, we make forward-looking statements which involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, 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 slides to our website that we'll be using during the call. On today's call, I'm joined by our President and Chief Executive Officer, Chris Viehbacher, Dr. Priya Singhal, Head of Development; and Mike McDonnell, Chief Financial Officer. We will make some opening comments, and then move to Q&A. And to allow us to get through as many questions as possible, we'll kindly ask that you limit yourself to just one question. And with that, I'll hand over to Chris.

**Chris Viehbacher** (CEO):
Thank you, Tim. Good morning, everybody. Perhaps before we get started, I'd like to note that this is Mike McDonnell's last quarterly presentation as CFO of Biogen. Mike, I believe this is your 97th quarter as a publicly quoted CFO, so congratulations on that amazing career. And I'll just take the opportunity to thank you. You've been a terrific partner and team member, and it's been great working with you, and we will miss you. And we, of course, are joined here also by Robin Kramer. I'm also proud to say that we've been able to promote from within. It's a great source of pride that we have that level of talent within the organization. So let's turn to Q4. As you all know, we have been faced with increased competition for our multiple sclerosis franchise. And really all of our priorities are thinking about how do we now build a new Biogen, how do we build a new phase of growth? We are focused really around three core priorities. The first are clearly the four products that we launched last year in Alzheimer's, Friedreich’s ataxia, depression, and ALS. Each of those products is not only a first-in-class but the first disease-modifying agent in each of these diseases. That's a source of pride in the level of innovation that Biogen is capable of but equally from a commercial point of view, this is a significant challenge since the level of education when you are a pioneer in an area is so much greater. We'll come back and talk a little more about that. The next is we have really reprioritized the pipeline. It's certainly been my experience over the years that focusing on a number of key projects is core to business success. I'm pretty grateful to both Priya Singhal and Jane Grogan, because they have both really cleaned out the pipeline for development in Priya's case and research in Jane's case. We are actually excited now by the products that are in there. We have a number of key developments that will start reading out in 2026. We think this is a multi-billion dollar portfolio and we're probably one of the few companies that can look at a pipeline that could be more than our current biopharmaceutical business when it gets to peak sales, if it all obviously comes to market. The third point, of course, is we have redesigned the company with a reduction of operating expenses, not just saving costs for the sake of cost but the ability to release resources for investing in growth. And that's what we're continuing to do. We're excited about our pipeline, and we've also freed up an awful lot of cash flow, as you'll see later. That cash flow we're investing for more substrate in growth. The race we are faced with is seeing the erosion of our multiple sclerosis product revenue. I'm particularly happy to see in 2024 that the revenue from our launch products really offsets the decline in our multiple sclerosis product revenue. When you look at total revenue decline by $160 million, and you note that contract manufacturing declined by $247 million, it means that really our core pharma business actually grew. And that's for the first time in four years. That's what we're all about in the near-term is trying to make sure that the revenue can exceed the multiple sclerosis product decline. Multiple sclerosis product decline is driven by a number of factors going forward, including the timing of a TYSABRI biosimilar in the U.S. and the timing of TECFIDERA generics in Europe. We’ve got four very innovative pioneering products. LEQEMBI will come on and talk about it in some detail. SKYCLARYS and Friedreich’s ataxia is again the very first treatment for Friedrich's ataxia. We have been able to determine from basically medical claims data that there are approximately 4,800 patients in the U.S. That's about what we thought. One of the complexities is that it's harder to find these patients because you could have a primary care physician in a rural setting with one single patient, and you have to go find them. We're talking to primary care physicians, cardiologists, and pediatricians. It's quite a large prescriber base for a narrow patient population. That is the core of what rare diseases are all about. We've got a lot more technology, we can use tools such as AI and genetic testing to help find those patients. But by its very nature, it is unfortunately not going to be a nice smooth progression quarter-on-quarter. That said, we're particularly proud to say that we have been able to double the number of patients on treatment in the past year. Not all of those are yet being reimbursed. We are able to get a lot of patients on the drug and then negotiate with governments, particularly in Europe, to get the reimbursement, and once we do that the patients flip from being free goods patients to actually revenue-generating treatments. There are always a bit of a number of patients diagnosed who haven't been waiting for treatment and you can get those quite easily. There are older patients who have lived with this disease for 30, 40 years. Those are the ones we have to hunt for. We will see another growth driver this year, and we expect to get approval for SKYCLARYS in Latin America. As we started with the U.S., we moved to Europe, and we are moving to South America and areas of the Middle East. We expect to see continued steady growth out of SKYCLARYS, but I appreciate that it's going to be hard for some of you to model on a quarterly basis. ZURZUVAE was a very nice launch last year and certainly exceeded our expectations. One of the things that was different from our expectations was that the main prescribers were OBGYNs. We still see some of those, but 80% of the prescriptions are driven by OBGYNs. This area has potentially more people who have ever prescribed for PPD than actual patients. Accurate targeting and thinking about multi-channel marketing commercial approaches are extremely important. We have filed in Europe and hope to see an approval sometime later this year. QALSODY is not necessarily a big revenue generator, but it is a breakthrough treatment in ALS. This is the first time we've been able to demonstrate that neurofilament can really help predict drugs early in development as to whether or not they are likely to work or not. And that accelerates the whole research and development in ALS. It's a big impact on patients. We're making a big impact on patients' lives. I showed this slide in a JPMorgan meeting, and there were investors who looked at that chart and said, this is not the chart of a small product. We've seen strong progress. We received some questions on the ex-U.S. launch. The ex-U.S. launch is contributing significantly more than we have seen in prior launches in other areas. Asia is extremely strong, leading that launch, with the single payer system removing many obstacles we face in the U.S. This year we have FDA approval for LEQEMBI IV maintenance. The first patients are hitting the 18-month mark. We've demonstrated that those who stay on treatment do better than those who stop. We believe that maintaining treatment is essential. We have rising sales of blood-based diagnostics. Getting FDA approval for some diagnostics is crucial for increasing physicians' confidence. We aim to triage patients at primary care levels more effectively. The subcutaneous form for maintenance is expected to be approved on August 31. It will facilitate patient compliance without needing infusion beds. The AHEAD 3-45 study is fully recruited, and we expect a readout in 2028. This landmark study might show the potential for preventing Alzheimer's by obtaining early patients. We're looking at the pipeline, focusing on three key areas: investment in Alzheimer's, positive data for Dapirolizumab in lupus, and conducting three Phase 3 trials for anti-CD38 targeting destructive kidney diseases. We have compelling Phase 2 results here. There's no guarantee anytime in research, but we feel particularly excited about Felzartamab and the potential in rare kidney disease.

**Priya Singhal** (Head of Development):
Thank you, Chris. Biogen's development organization had another very productive quarter. We achieved several important milestones across key strategic areas for the company. I would like to begin with immunology where in collaboration with UCB, as Chris mentioned, we initiated the second Phase III study for dapi-pegol in SLE. This follows the positive readout of the first Phase III study and sharing of detailed study results as a late breaker at the ACR Annual Meeting last year. Dapi-pegol, as Chris mentioned, is only the third agent with a positive global Phase III study in SLE. Additionally, Felzartamab was granted orphan drug designation in the EU for both solid organ transplantation and IgA nephropathy. We believe this designation, which is intended to support the development of treatments with significant unmet medical need, underscores the potential for Felzartamab to become a meaningful new therapy for serious immune-mediated diseases like AMR, IgAN, and PMN globally. In rare disease, we continued unlocking new geographies for SKYCLARYS. Leveraging the results of the SKYCLARYS-positive MOXIe trial, we obtained approval in Chile and currently have 13 additional regulatory filings under review. This includes additional filings in Latin America, where we expect regulatory decisions this year in countries such as Brazil and Argentina as we continue our global rollout. Importantly, we also took significant steps towards expanding the value of key portfolio products for patients. In SMA, regulatory filings for high-dose nusinersen have now been accepted in the U.S. and EU, and we expect an FDA decision in September of this year. In Alzheimer's disease, we recently received FDA approval for LEQEMBI less frequent IV maintenance dosing. This is both a significant step for LEQEMBI and a meaningful advancement in the evolution of Alzheimer's treatment more broadly. I would like to briefly review why there is an urgency to treat now and why maintenance is important based on LEQEMBI data that we have obtained to date. First, the CLARITY AD study is unique in that it did not exclude patients based upon tau brain pathology. Therefore, we have placebo-controlled clinical trial data across the full early Alzheimer's disease population, including individuals with no and low tau, which represents the earlier stages of AD. In this population, 76% of patients showed no decline and 60% showed clinical improvement at 18 months, as assessed by CDR Sum of Boxes. What this means is that in over three-fourths of early AD patients, their disease was stabilized and more than half the patients showed improved symptoms when treated with LEQEMBI. The reason why this is important is that this data suggests that patients treated early in their disease can see a profound benefit, which underscores the importance of initiating treatment early. Furthermore, this data also supports the potential of our ongoing presymptomatic AHEAD 3-45 trial. Now that I've shown you why early treatment initiation is important, let me remind you why the new maintenance IV approval is also critical. This is because data shows that Alzheimer's does not stop after plaque removal. Importantly, prior data from the LEQEMBI Phase II study and its open-label extension show that discontinuation of treatment is associated with reaccumulation of Alzheimer's biomarkers, including amyloid plaques and a reversion back to the placebo rate of clinical decline. We believe LEQEMBI, with its differentiated mechanism of action, is uniquely positioned as it is the only disease-modifying therapy in Alzheimer's today to show additional benefit with continued treatment after plaque reduction. As you can see from this slide, the three-year data from the CLARITY AD study and its open-label extension support the potential for long-term benefit to patients by showing that continued LEQEMBI treatment resulted in a doubling of the clinical benefit observed at 18 months, as compared to a matched natural history cohort. With these findings in mind, we are working with Eisai to deliver additional options for patients with the aim of maximizing both the convenience and the clinical benefit of LEQEMBI. This includes a subcutaneous formulation with the potential for at-home administration to further add to patient optionality and convenience. For subcutaneous maintenance dosing, we now have a PDUFA date of August 2025. Next year, in 2026, we aim to introduce subcutaneous dosing for treatment initiation, which we believe will allow even more patients to get started on therapy. Building upon the encouraging results obtained in the no- or low-tau population in Clarity AD, we continue to advance evaluating AHEAD 3-45, evaluating LEQEMBI in individuals who have amyloid plaque pathology in the brain but before the onset of symptoms, which has the potential to further expand the use of LEQEMBI. Turning now to the pipeline, we have previously discussed our efforts to augment our pipeline with the objective of rebalancing the risk profile and investing to win in key areas of expected future growth. We continue to remain disciplined in our approach as we assess inflection points for our internal development pipeline but also as we evaluate potential external innovation opportunities that we believe can help support Biogen's goal of sustainable growth.

**Mike McDonnell** (CFO):
Thank you, Priya. Good morning to everyone. I'd like to begin by providing some highlights from the reported results. Total revenue for the quarter was $2.5 billion, which represents 3% growth from the fourth quarter of 2023. Fourth quarter non-GAAP diluted EPS was $3.44 and that's 17% higher than the fourth quarter of 2023. For the full year of 2024, total revenue of $9.7 billion represents a decline of 2% from 2023, consistent with our most recent guidance of a low single-digit decline. Full year 2024 non-GAAP diluted EPS was $16.47 and that's 12% higher than the full year 2023, also consistent with our most recent guidance range of $16.10 to $16.60. EPS growth and operating income expansion in both the fourth quarter and full year were supported by our Fit for Growth and R&D prioritization initiatives. We’re pleased that this performance allowed us to generate $722 million of free cash flow in the quarter, which brought us to $2.7 billion for the full year, an improvement of $1.4 billion from $1.3 billion generated in 2023. Our MS product revenue declined approximately 8% at actual currency and 9% at constant currency compared to the fourth quarter of 2023. This was driven primarily by competition in the space, partially offset by some seasonal channel dynamics. Interferons continued to be impacted by competition as patients transition to higher efficacy therapies, and TECFIDERA continued to be impacted by generic competition globally. TYSABRI has seen some impacts from a biosimilar entrant in Europe, and although a biosimilar has not yet launched in the U.S., we continue to see competition increasing in the high-efficacy class. VUMERITY saw an increase in demand in the quarter and also benefited from some seasonal channel dynamics. Our rare disease franchise produced revenue of $535 million in the fourth quarter, representing a growth of 13% at actual currency and 15% at constant currency from the fourth quarter of 2023. Global SKYCLARYS revenue in the fourth quarter was $102 million, an increase of 83% versus the fourth quarter of 2023, with nearly double the number of patients on therapy. U.S. SKYCLARYS revenue in the fourth quarter was $71 million. We continued to add patients in the quarter, but revenue was impacted by an inventory build in the third quarter that was drawn down in the fourth quarter as well as some Medicare discount dynamics. Global SPINRAZA revenue of $421 million in the fourth quarter grew 2% year-over-year, including growth in the U.S., which was up 6% year-over-year. ZURZUVAE delivered approximately $23 million of revenue in the quarter, driven by an increase in demand, partially offset by channel dynamics. We saw steady sequential growth for LEQEMBI with fourth quarter global in-market sales booked by Eisai of approximately $87 million, which is up approximately 30% sequentially from the third quarter of 2024. LEQEMBI fourth quarter end-market sales in the U.S. were $50 million, also up roughly 28% sequentially from the third quarter of 2024. Non-GAAP cost of sales as a percentage of revenue improved 300 basis points in the fourth quarter compared to Q4 2023 due primarily to lower idle capacity charges. Our fourth quarter non-GAAP core operating expense – R&D plus SG&A expense increased 4% year-over-year, as the benefits from our R&D prioritization and Fit for Growth initiatives allowed us to mostly absorb incremental spend associated with our launches. Non-GAAP other expense was $72 million in the quarter, driven primarily by net interest expense. Our non-GAAP diluted EPS was $3.44 in the fourth quarter, representing growth of 17% versus Q4 2023. We generated $2.7 billion of free cash flow in 2024 due to strong operating income.

**Tim Power** (Head of Investor Relations):
Thanks, Mike. Jennifer, can we go to the first question, please?

**Operator** (Operator):
Your first question comes from the line of Salveen Richter with Goldman Sachs.

**Salveen Richter** (Analyst):
Good morning. Thanks for taking my question. What is your latest thinking on the capacity preference and potential timelines for external BD? And in terms of your growth outlook, just help us understand the balance between the existing pipeline and the assets you could bring in? Thank you.

**Chris Viehbacher** (CEO):
Thanks, Salveen. I think we’ll get Mike to give you an update on capacity. As I said, we are very excited about the pipeline that we have. One of the things that we'd like to do is continue to reinforce that pipeline. Over the years, I've concluded that you can never have enough pipeline. First element, we've done a major restructuring of research because in our industry, it is very expensive to bring in late-stage assets. We would like to have research as our primary source of innovation, obviously, both internally and externally. We've completely restructured research to create the financial capacity as well as the talent capacity to do more collaborations and bring assets in, particularly pre GLP tox. We're looking at virtually every phase; our early-stage development pipeline is still relatively thin. But even if we can find things in Phase 3, if they have solid Phase 2 data, I'm not big on taking a lot of risks on Phase 3 clinical trials because that gets expensive. In terms of acquisitions, we have been migrating into new areas such as immunology and rare diseases. If we can find acquisitions that bolster our positions in those areas, we will do so. We don't have a particular size that we're looking for. It could be late-stage development; it could be early-stage commercial; it just has to make financial sense. We don’t need to take on a huge amount of risk on acquisitions. That said, we are always looking; we always have at least 15 to 20 different projects being evaluated at any one time. You have to look at 100 things before you find something of interest.

**Mike McDonnell** (CFO):
Yes. Regarding capacity, our balance sheet is in excellent shape. As noted earlier, we finished the year with $2.4 billion in cash. Our EBITDA run rate exceeds $3 billion annually, with $6.3 billion in gross debt and $3.9 billion in net debt. We are satisfied with our free cash flow results this year, projected at $2.7 billion in 2024, so that cash balance will continue to increase. Considering our modest leverage, the $2.4 billion in cash, and the growing free cash flow, our balance sheet is very strong. As Chris mentioned, our strategy is to remain disciplined and pursue opportunities that are financially sound. We have ample capacity to undertake a range of smaller initiatives or possibly a larger one if it aligns well financially.

**Tim Power** (Head of Investor Relations):
Thanks, Mike. Let’s go to the next question, please.

**Operator** (Operator):
We'll take our next question from Michael Yee with Jefferies.

**Michael Yee** (Analyst):
Thanks. Priya, you mentioned that on the LEQEMBI slide, one of the important developments is the potential for blood-based diagnostics. Can you walk through how important that is in terms of any bottlenecks and specifically whether that totally would be able to replace PET or how that actually works since diagnostics are a little bit complicated? Thank you.

**Priya Singhal** (Head of Development):
Yes. Thanks, Mike. So overall, accurate diagnosis of Alzheimer's disease and confirmation of amyloid remains crucial. It's important. With the advent of anti-amyloid therapy, we've seen amazing momentum. As Chris mentioned, we have tests available today that are at Triage sort of level. The question now is what's the availability of an in vitro diagnostic approved by the FDA that can be used widely, reimbursed, and give physicians confidence in the results versus a PET scan. We believe this is likely to happen in the near-term. Fujirebio is already filed, and we know there are others like C2N and Roche working on these IVDs. Once filed, it usually takes about 6 months for the approval. The next stage will be generating data so that payers and others are confident that it can adequately represent the Medicare population, which tends to be the broader population. Concordance and reimbursement are crucial, but we think this is moving really fast, and we expect to see several milestones in the near term.

**Tim Power** (Head of Investor Relations):
Thanks, Priya. Let’s go to the next question, please, Jennifer.

**Operator** (Operator):
The next question comes from Tim Anderson with Bank of America.

**Tim Anderson** (Analyst):
Thank you. On your spend guidance, you're saying $3.9 billion combined R&D and SG&A, which is about $200 million lower than consensus. Revenues are also a little bit lower than consensus. So it offsets each other. My question is how much does the Royalty Pharma deal take out of the R&D line in 2025? I know it's $250 million in aggregate that they'll fund, but what's that relief to 2025 R&D? Can we expect Biogen to do more of these off-balance sheet types of transactions with pipeline programs over the next one to two years?

**Mike McDonnell** (CFO):
So Tim, Mike speaking. Our current expectation is that the $200 million we would receive in 2025 from Royalty Pharma would be accounted for as a reduction to R&D expense, so that would be a dollar-for-dollar reduction to the guidance.

**Chris Viehbacher** (CEO):
In terms of other deals, remuneration to those providing financing is usually through royalties. It's not easy to make work for every product. So we've been looking at this as a one-off transaction. It’s a useful model to take risk off the table and spread the investment across more assets. It allows for more shots on goal.

**Tim Power** (Head of Investor Relations):
Thanks Chris. We’ll go to the next one please.

**Operator** (Operator):
We'll go next to Brian Abrahams with RBC Capital Markets.

**Brian Abrahams** (Analyst):
Hi, good morning. Thanks for taking my question. On SKYCLARYS, can you elaborate a little bit more on the dynamics you're seeing in the U.S.? Are there ways to accelerate patient identification to meaningfully grow revenue there? Should we expect to see this more as an ex-U.S. international growth product? How significant are the hurdles in terms of reimbursement outside the U.S.? Thanks.

**Chris Viehbacher** (CEO):
In the U.S., we have already adopted several creative approaches. AI has helped identify where patients are, as there’s a large number of potential prescribers. The challenge is zeroing in on geography and making visits efficient. We’ve employed AI, and there is a greater interest in genetic testing, which has increased utilization now that SKYCLARYS is available. We're utilizing multi-channel marketing to educate physicians about Friedreich's ataxia and the various ataxias out there. Often, it takes three to four years for a patient to get a definitive diagnosis. We aim to identify patients more swiftly. In the U.S., reimbursement isn't a major issue; we have a skilled group helping patients navigate that system. In Europe, we anticipate no significant reimbursement issues, mostly requiring demonstrations of cost-effectiveness. Once we have that, it should help in discussions with reimbursing countries. The uptake is encouraging, with 10 countries in Europe currently reimbursing, and more are added quarterly.

**Tim Power** (Head of Investor Relations):
We’ll go to the next question please, Jennifer.

**Operator** (Operator):
We’ll go next to Marc Goodman with Leerink Partners.

**Marc Goodman** (Analyst):
Yeah, good morning. Could you give us a little more flavor on what's happening with SPINRAZA in the U.S. and the U.S. dynamics and how much inventory is mattering. What's happening with pricing? Just a little more color there. Thanks.

**Chris Viehbacher** (CEO):
Mike will take the inventory question. SPINRAZA is in a very competitive market with a limited number of patients. You've got a gene therapy, an oral therapy, and an intrathecal therapy competing for a relatively small patient group. We focus on younger patients but also have a much larger adult patient population. Getting to those patients is like the same process I described for Friedreich's ataxia. Competing in this market, efficacy is key. The high dose will be important for therapeutic levels and will significantly cut loading doses. We are developing a device to market in 2026 that allows for easy intrathecal injections, which has had positive responses from patients and could benefit multiple intrathecal products. Hence, we're optimistic about our position moving forward. Mike, do you want to address inventory dynamics?

**Mike McDonnell** (CFO):
Mark, there was nothing concerning in terms of inventory for SPINRAZA. We saw some lumpiness in revenue throughout 2024 due to shipment timing, but the fourth quarter growth was consistent with trends.

**Tim Power** (Head of Investor Relations):
Let’s go to the next question please.

**Operator** (Operator):
Paul Matteis with Stifel.

**Paul Matteis** (Analyst):
Hi, good morning. Thanks so much for taking my question. Chris, if you take a step back now, you got to be at a point, I would think, with ZURZUVAE, SKYCLARYS, lecanemab to some degree, although maybe the variance of outcomes there is a little bit wider. Or at least for the next couple of years, you probably have a good window into the range of outcomes for these products. Do you feel like you can get back to sustainable revenue growth based on what you have internally and what you have high visibility into? Or how important is securing a significant upside win from the pipeline or buying growth externally via BD? Thanks so much.

**Chris Viehbacher** (CEO):
We have about $4.5 billion of revenue left in MS and about $3 billion of profit. That's the headwind we'll face in the next 5 to 10 years. Some products are sticky, as patients tend to stay on them. The #1 product with the most potential to offset this is LEQEMBI. We're encouraged by recent results and believe these catalysts could accelerate growth. There’s a huge unmet need in Alzheimer's, a fatal disease. If we can stabilize 76% of patients, we have significant value proposition. There’s an opportunity to expand the prescriber base with new formulations. The new products and pipeline development will become a bigger portion of our revenue as MS portfolio declines.

**Tim Power** (Head of Investor Relations):
Thanks Chris. Let’s go to the next question please.

**Operator** (Operator):
We'll go next to Umer Raffat with Evercore.

**Umer Raffat** (Analyst):
Hi, guys. Thanks for taking my question. I want to say thank you to Mike for all your help over time, and welcome to Tim. I have two questions today if I may. First for Priya. In a scenario where Lilly hits Trailblazer Alzheimer's three in preclinical on the progression endpoint, how does that factor into your thinking around how you could accelerate timelines for AHEAD 3-45? And also your comfort with the endpoint being used there. Secondly, Chris, a big picture question. The current market cap is around $20 billion relative to the amount paid for Reata. The market is reflecting a view that M&A choices in the last couple of years may not have met expectations or perhaps the expectations were higher. What learnings are you taking into additional capital deployment? A $10 billion deal would be significant.

**Priya Singhal** (Head of Development):
We remain excited about the potential for AHEAD 3-45. Just a reminder, we completed enrollment last year, and it’s a four-year therapy. Eisai has reiterated the expected outcomes timing in 2028. We evaluate options for earlier readouts and engage closely with regulators like the FDA. The AHEAD 3 trial has a biomarker outcome assessing amyloid clearance. In AHEAD 4 and 5, we're looking at cognitively relevant endpoints. I think we feel very confident about the trial design and its potential to provide insights on preventing or slowing onset of Alzheimer's.

**Chris Viehbacher** (CEO):
There's a human factor here. Over the years, I’ve observed that your interest in significant acquisitions inversely correlates with your confidence in your existing pipeline. If you lack confidence in your pipeline, you're more inclined to spend externally. At Biogen, we previously chased complex problems without solid Phase 2 data. I've found, however, that we've eliminated many programs unlikely to succeed in the marketplace. Our current pipeline provides much greater confidence. We can find products with strong Phase 2 data and credibility in R&D results. We're considering high biotype transactions. We liked the Reata deal but maybe the street had different expectations. Acquisitions that provide significant value remain interesting. We could secure another Reata if advantageous. We won't do one deal that uses our entire cash flow; we want multiple assets to build our pipeline. We're not under pressure to make transactions; we can keep focusing on execution.

**Tim Power** (Head of Investor Relations):
Let’s go to the next one please, Jennifer.

**Operator** (Operator):
We'll go next to Chris Schott with JPMorgan.

**Chris Schott** (Analyst):
Great. Thank so much for the question. I want to come back to the OpEx space. I know the company is wrapping up its Fit for Growth program and there are some moving pieces here with the Royalty Pharma deal. But as we think about the P&L going forward, is this kind of $3.9 billion or so OpEx space a good rough number to think about for Biogen going forward? Or is there any other color about how to think about margin progression as we think about the next few years? Thank you.

**Mike McDonnell** (CFO):
Yes, Chris, I think that's right. The Fit for Growth program was designed to take our OpEx to a level that supports our revenue expectations. As we exit 2025 and move into future years, this $3.9 billion base rate is a good number to use as your baseline model.

**Chris Viehbacher** (CEO):
We've prioritized and stopped several internal programs. This creates financial capacity to bring in new assets. Prioritization allows us to do business development without increasing overall expenditure. This approach has been effective so far.

**Tim Power** (Head of Investor Relations):
And then we are running short on time. Maybe to squeeze in 1 or 2 last ones, let’s go to the next one.

**Operator** (Operator):
We'll go next to Evan Seigerman with BMO Capital Markets.

**Evan Seigerman** (Analyst):
Hi, guys. Thank you so much for taking my question. Mike, congrats on your retirement. You will be missed. Robin. I'm looking forward to working with you. And Tim, congrats on your first earnings call. I want to briefly touch on the use of GLP-1s in Alzheimer's disease. Novo Nordisk has talked a lot about the EVOKE trial, high risk, high reward. What happens if that hits, and this could evolve the standard of care for Alzheimer's prevention? Priya, I would love your thoughts there. Thank you.

**Priya Singhal** (Head of Development):
Yes, thank you, Evan. This is an interesting hypothesis supported by some preclinical data and meta-analyses looking at all-cause dementia and subsets, including Alzheimer's. The scientific hypothesis behind it revolves around glucose metabolism and its implications for neuroinflammation and vascular health. While exploring this avenue is worthwhile, it's important to remember that some randomized controlled trials have failed in this space. Nonetheless, we look forward to the outcomes of these trials. In tackling Alzheimer's disease, addressing the central pathology is essential. These central pathologies build up over years. Therefore, we continue to believe that an anti-amyloid agent like LEQEMBI that addresses plaque along with soluble toxic species will be vital. We eagerly await the results of EVOKE and EVOKE+.

**Tim Power** (Head of Investor Relations):
Okay. Let’s go to our last one please.

**Operator** (Operator):
Our last question comes from Phil Nadeau with TD Cowen.

**Phil Nadeau** (Analyst):
Good morning. Thanks for fitting us in. Let me add our congratulations to Mike, Robin, and Tim on their transitions. Just to drill down on the LEQEMBI short-term trajectory a little more closely. In Q4, revenue was up 30%, but the revenue recognized was only up $1 million. Can you talk about the dynamics behind that? Were there one-time issues? Or is there an increase in spend that we should project into 2025? And looking at 2025 trends, growth in 2024 was largely driven by ex-U.S. is that replicable in 2025? Or are the low-hanging fruit of those markets already picked? Thanks.

**Chris Viehbacher** (CEO):
LEQEMBI in the U.S. was certainly up 200% Q4 over Q1. We're seeing significant growth in the U.S. while the ex-U.S. has also been strong. For 2025, barring anything else, we see trends continuing. There may be some acceleration with IV maintenance, but we won't have the subcutaneous for maintenance until the last part of the year. Blood-based diagnostics could play a role but diagnostic acceptance and reimbursement can take time. We anticipate steady, continuous progress quarter-on-quarter. The unmet need in Alzheimer's is major. We believe we can improve positioning with new formulations and blood-based diagnostics, aiming for accelerated growth in the upcoming years.

**Mike McDonnell** (CFO):
Yes. And Phil, to reiterate, the LEQEMBI fourth quarter end-market revenue was $87 million globally, which is up about 30% sequentially from the third quarter of 2024. In the U.S., that $50 million represents about 28% sequential growth from the third quarter.

**Tim Power** (Head of Investor Relations):
Thanks, Mike, and thanks, everybody, for your time today. The IR team is available if you've got questions later today. Thank you.

**Operator** (Operator):
This concludes today's conference. We thank you for your participation.