Q3 2022 Biogen Inc Earnings Call
Good morning, My name is Jennifer and I will be your conference operator today.
At this time I would like to welcome everyone to the Biogen third quarter 2022 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.
If you'd like to ask a question. During this time simply press star one on your telephone keypad.
Please limit yourself to one question to allow other participants time for questions.
If you require any further follow up you May press star one again to rejoin the queue.
Thank you I would now like to turn the conference over to Mr. Mike Hickey head of Investor Relations. Mr. Hanky, you may begin your conference.
Good morning, and welcome to Biogen's third quarter 2022 earnings call before we begin I encourage everyone to go to the investors section of Biogen Dot com to find the earnings release and related financial tables, including our GAAP financial measures and a reconciliation of the GAAP to non-GAAP financial measures that we will discuss today.
Our GAAP financials are provided in tables, one and two and table four includes a reconciliation of our GAAP to non-GAAP financial results.
We believe non-GAAP financial results better represent the ongoing economics of our business and reflect how we manage the business internally.
We have also posted slides on our website that follow the discussions related to this call I would like to point out that we will be making forward looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially.
I encourage you to consult the risk factors discussed in our SEC filings for additional detail.
On today's call I'm joined by our Chief Executive Officer, Michelle We're not says Dr. Priya Singhal interim head of research and development and our CFO , Mike Mcdonnell as a reminder, during the Q&A portion of the call. We kindly ask that you limit yourself to one question I will now turn the call over to Michele.
Good morning, everyone and thank you for joining US this is an exciting time for Biogen.
You shouldn't two key developments across our pipeline, which includes 12 programs in phase III or filed we continue to.
And we are pleased to be raising our full year financial guidance.
I would like to begin by reviewing the important advances we made this quarter and what we believe they are meaningful Biogen Priya will then review our recent progress in R&D and Mike will discuss our third quarter performance.
First together, we'd say we were excited to announce the positive results from <unk> phase III study of taking them up in earlier in the disease.
For over 15 years, Biogen has been working relentlessly to bring forward new therapeutics in Alzheimer's disease, incorporating both new insights in disease biology, and clinical trial design and today, we celebrate the positive clarity readout as a.
<unk> achievement in the treatment of Alzheimer's disease.
The results from clarity AE illustrated several key aspects of <unk> clinical profile, which we believe could provide a meaningful benefit for patients.
First Les can elaborate administration showed a highly statistically significant reduction in clinical decline as.
Ali our six months.
<unk> expanded over the 18 months study per yard on an absolute basis consistent with the disease modifying effect.
Sorry.
Second the study was positive on all key secondary endpoints. This includes merger of cognition as well as activities of daily living such as conducting personal finances, performing household tasks and independently traveling out of home.
Third the rate of ARIA in clarity whatsoever.
So we didnt expectations.
With an FDA decision on accelerated approval expected by January six of next year and <unk> planned to file for traditional approval in the U S EU and Japan by the end of Q1 2023 literally has the potential to be the first globally approved treatment to slow down.
Progression of Alzheimer's disease, we look forward to working with the Psi as they continue to engage both regulators and CMS with the goal of ensuring that people with asthma disease have access to important new treatments.
We believe the clarity results underscore the progress we are making in the fight against Alzheimer's, but Biogen will not stop here, we plan to build upon our current learnings as we continued to advance a diversified pipeline of potential Alzheimer's treatment.
This includes two clinical stage assets targeting Tau pathology beef <unk>, our phase II ready antisense oligonucleotide and be born one sweep a phase one small molecule.
Beyond that <unk> Biogen has important near term.
Opportunities in all of the therapeutic areas, where the unmet medical need remains significant.
This includes depression, where together we stage, we are continuing to advance the regulatory filing for <unk> hundred alone in both major depressive disorders, and postpartum depression with a novel mechanism of action efficacy observed as early as three days and a consistent <unk>.
<unk> and Tolerability profile across eight clinical studies, we believe that you'll have to learn if approved could be a meaningful new therapy for depression.
Second he has accepted our filing for it to happen in Q1, AOS under the accelerated approval pathway and granted priority review.
While the study did not meet the primary endpoint at six months longer follow up.
Has shown that patients who remain on took us an experience at a slower rate of decline in key clinical measures, including lung functions muscle strengths and quality of life.
We are truly encouraged by these results in such a debilitating and fatal disease and look forward to an FDA decision expected by April of next year.
We believe these near term opportunities along with new launches of Biosimilars.
However, the potential drive renewed growth and position us to have five key franchises by 2025.
Furthermore, we see the potential for additional growth drivers in the mid to late 2000 twenty's in areas such as Parkinsons disease.
Bruce and stroke, all with the programs currently in phase III.
Overall, we believe that we at an inflection point in CNS drug discovery and development and these recent developments, but you see advancements.
But that being made in neuroscience for years Biogen has been expanding our expertise and capabilities in this area and we believe that we are well position to remain a leader in neuroscience as we work to Usher in the next wave of CNS therapeutics.
Also advancing our portfolio in specialized immunology, where we have four late stage studies in lupus.
I will now turn the call over to <unk> for a more detailed update on our recent progress in R&D.
Thank you Michelle and good morning, everyone.
Michelle mentioned, we had several exciting R&D achievements this past quarter on.
That meaningfully advance the potential of our pipeline, which includes turnkey program.
Which are in phase III, a file in order to deliver new impactful therapies for patients and drive renewed growth for the company.
Starting with Alzheimer's disease, together with East side, we were very excited to announce the positive results of the clarity study evaluating <unk> in early Alzheimer's disease.
The primary endpoint of the study was the change from baseline on CVR sum of boxes.
Established measure of cognition function.
<unk> disease.
This study met the primary endpoint and Macadamize reduce clinical decline on the CVR sum of boxes compared with placebo at 18 months by 0.45, representing a treatment difference of 27%.
We also absorbed the highly statistically significant reduction in CVR sum of boxes versus placebo.
At six months.
We believe this demonstrates a rapid onset of efficacy and a significant change in CD CVR sum of boxes versus placebo.
Furthermore, the effect on CVR sum of boxes expanded over the 18 month study period on an absolute basis.
Adjusting that Mccannon model are exerting a disease modifying itself.
This study also met all key secondary endpoints, reinforcing mccanna mobs impact on cognition and function.
This includes a statistically significant reduction in amyloid plaque in the brain as well as additional clinical assessments such as the Adcs Mci ADL. It cant give us either the assessment of activities of daily living relative to placebo.
We believe that these efficacy results when combined with an observed overall incidence of ARIA of approximately 21% highlights the potential for the economy to be eating disease modifying treatment.
Ms disease.
ESI will prevent the clarity study results at <unk> in November and intends to publish the findings in a peer reviewed medical journal.
The <unk> filing under the accelerated approval pathway is currently under review with the producer date of January six 2023.
The FDA has also agreed that the clarity a be good.
Serve as a confirmatory study to verify the clinical benefit of the Panama.
Accordingly, we expect ESI will file for traditional approval Aqua Cana map in the U S. As soon as possible following a positive FDA decision on accelerated approval.
This filing is expected by the end of Q1 2023, along with marketing authorization application in the EU and Japan expected by the end of Q1 2023 as well.
<unk> has also been engaging with the centers of Medicare and Medicaid services as they work to maximize access for patients.
Beyond these regulatory and access engagements together with east side. We are also advancing a comprehensive development program for the Canada map, which include first the ongoing ahead 345 preclinical study to evaluate <unk> been administered earlier in disease.
When amyloid pathology is present, but before the onset of cognitive impairment.
Second investigating a potential maintenance dosing regimen with the goal of reducing from Mccann <unk> dosing frequency over time.
And the development of a subcutaneous formulation of <unk>.
At AIC earlier this year he.
Syed presented bioavailability data from a phase one study comparing IV versus subcutaneous dosing as well as modeling and simulation data illustrating that is fixed subcutaneous dose of 720 milligrams administered weekly who may potential.
As a result in comparable exposure and efficacy to the current IV formulation violet potentially potentially lowering the incidence of ARIA.
With these results in hand, we are focused now on maintaining our leadership position in Alzheimer's disease over the long term.
We have an industry, leading portfolio addressing both amyloid and tau pathology as well as a multi target multi modality preclinical portfolio targeting a broad range of Alzheimer's disease biology.
Now I will turn to neuropsychiatry.
This quarter, Biogen and Sage presented new data that support the standalone potential if approved as a novel treatment for bulk major depressive disorder and postpartum depression.
This includes an updated analysis of the open label ongoing longitudinal shoreline study in mbd, which showed that the medium time to onset.
I am sorry, the median time to first repeat treatment for patients who responded to the original 14 day treatment was a 135 days from the 30 milligram cohort and 249 days for the 50 milligram cohort.
We believe these data further support to run along at the potential meaningful new treatment for people suffering from depression, and we are continuing to work with sage to advance a single U S regulatory filing farther and alone in MVD and bpd expected to be completed by the end of.
This year.
Moving onto our neuromuscular portfolio, the New England Journal of Medicine recently published 12 month data from the Phase three Valor study and its open label extension evaluating to fasten in sod, one AOS, a progressive and Rad genetic form of Pls, which garen.
<unk> has no targeted therapies.
The published data showed that patients who initiated a first in valor experienced slower rates of decline across critical measures of function muscle strength and quality of life versus those who transitioned from placebo to the person at the start of the open label extension.
Six months later.
Furthermore, so far some led to a robust and sustained reduction in Europe element, a marker of neuronal injury and neuro degeneration.
Yeah.
In July the <unk>.
<unk> filing was accepted by the FDA under the accelerated approval pathway with priority review.
Subsequently, we submitted responses to information request by the FDA, which the FDA considered a major amendment to the application that will require additional time point of view.
As a result, the review period has been extended by three months with an FDA decision now expected by April 25 2023.
In movement disorders, together with Denali, we initiated our second late stage clinical trial for <unk> 122, it's small molecule locked two inhibitor.
So phase III lighthouse study.
<unk> 122 individuals with a confirmed pathogenic <unk> mutation.
Given that locked two activity is believed to regulate lysosomal function and underlying biological pathways implicated in Parkinson's disease. We are also advancing the phase II B Luma study in idiopathic Parkinson's disease, which we initiated earlier this year.
Moving onto specialized immunology.
We were excited to announce the initiation of the phase two three study of <unk> for the map a bit 59 in cutaneous lupus erythematosus or cle.
The prior phase two lilac study of <unk> met the primary endpoints in both parts of the study evaluating safety and efficacy and individuals with cle and systemic lupus erythematosus or SLE.
The detailed phase II results were recently published its two separate manuscript in the New England Journal of Medicine.
The phase two three study in cle built upon our mid to late stage pipeline and specialized immunology, which also includes three phase III studies in SLE.
Political and Matt and one for <unk> Bank, all of which we are developing in collaboration with UCB.
Looking ahead, we also have a number of exciting opportunities on the horizon.
This includes the potential to deliver new therapies, and Alzheimer's depression, and sod one AOS.
Initiation of mid to late stage programs in Alzheimer's disease and stroke.
And a proof of concept study readout and broad E L F.
In conclusion, we believe that our recent progress exemplifies important elements of our broader approach to R&D at Biogen.
This includes a focus on genetically validated targets and biology.
The use of novel Biomarkers to better characterize disease biology, and target engagement as well as our ability to employ the right therapeutic modality for the specific disease area our target.
Together, we believe these principles.
Combined with our ongoing prioritization effort.
Tension to increase the probability of success and disease areas with significant unmet need.
I will now pass the call over to Mike.
Thank you Peter and good morning, everyone.
I will provide some highlights of our financial performance for the third quarter.
And an update to our full year 2022 guidance. Please note that all financial comparisons are versus the third quarter of 2021.
Total revenue for the third quarter was $2 5 billion, a decrease of 10% at actual currency and 8% at constant currency non.
non-GAAP diluted EPS in the third quarter was $4 77, which was flat versus.
Versus the third quarter of 2021.
Total Fms revenue inclusive of <unk> royalties was $1 6 billion, which was a decrease of 11% at actual currency and 9% at constant currency.
Global <unk> revenue of $339 million decreased 32% at actual currency and 30% at constant currency.
We saw continued erosion of <unk> in the U S. Due to generic Senate impact from generics outside of the U S primarily in Germany.
We continue to see new generic launches in the EU earlier. This month the advocate general of the European Court of Justice issued a non binding advisory opinion, we would expect <unk> to have statutory market protection until at least February of 2024, if the court adopts the advisory opinion, there is no deadline for the court to issue its final decision.
But we understand that approximately three to five months after issuance of the advocate General's opinion is typical.
Separately, we are filing actions to enforce our recently granted European Tech Vadera dosing patent, which expires in 2028.
We have been successful in obtaining preliminary injunctions in some countries and unsuccessful and others, including Germany and France.
So we either affirm <unk> entitlement to statutory market protection in the EU or successfully asserted our patent generics can continue to sell in the countries, where we do not have preliminary injunctions in place.
Global <unk> revenue of $138 million increased 14% at actual currency and 15% at constant currency U S. Primarily revenue increased 6% with higher volumes, partially offset by increased discounts and allowances.
Mary is being impacted by both payer pressure and a contraction of the oral segment of the market.
The United States.
We continue to work with our contract manufacturing supplier to address potential supply constraints for <unk>. We have identified the root cause implemented manufacturing changes required to resolve the issue and are now working to secure necessary related regulatory approvals, we do not anticipate a supply shortage in 2022.
<unk> and are currently focused on rebuilding adequate inventory with the goal of ensuring supply and re initiating new country launches in 2023.
Global Tysabri revenue of $505 million decreased 3% at actual currency and 1% at constant currency.
U S. Tysabri revenue was negatively impacted by higher discounts and allowances and lower volume outside.
Outside the U S. We were pleased to see continued patient growth as well as good uptake of the subcutaneous formulation in the EU, which has now been launched in over 25 markets with an average conversion rate.
Approximately 40%.
Although the composition of matter patents for Tysabri have expired.
Other patents related to the making and using a tysabri, including those listed in our 10-K will continue to enforce this IP, including filing suit against Sandoz in the United States.
Global interferon revenue of $336 million decreased 13% at actual currency and 12% in constant currency.
And was impacted by the continued shift from the injectable platforms to oral or high efficacy therapies.
Moving to SMA global spin Rozzer revenue of $431 million declined 3% at actual currency and increased 2% at constant currency.
In the United States been Rozzer revenue was flat versus the prior year and we believe we may be seeing signs of stabilization in the U S outs.
Outside the U S. Excluding negative currency impacts revenue increased due to volume growth in certain Asian markets as well as some positive pricing dynamics parse.
Partially offset by competition and the timing of shipments.
Overall, we continue to believe it's been raws it has the potential to grow over time.
Moving to our Biosimilars business revenue of $188 million declined 7% at actual currency and 4% at constant currency. We saw an increase in sales volumes, which was offset by unfavorable pricing as well as negative currency impacts.
We continue to expect a gradual launch of BIOLASE with more meaningful revenue contribution expected to begin in 2023.
Total anti CD 20 revenue of $417 million was flat versus the prior year revenue from <unk> royalties increased 6%, which was offset by continued rituxan declines due to biosimilar competition.
Now moving on to expenses in the balance sheet third quarter non-GAAP cost of sales was $470 million, which includes $12 million of idle capacity charges.
Going forward, we expect further pressure on gross margins due to shifts in product mix and potential idle capacity charges.
Largely resulting from the suspension of drug product manufacturing fragile.
Third quarter, non-GAAP R&D expense was $549 million.
This is compared to $702 million in the third quarter of 2021, which included approximately $165 million in upfront payments related to business development transactions as well as clinical trial closeout costs.
non-GAAP SG&A was $562 million this is compared to $651 million in the third quarter of 2021. The decrease in SG&A expense was driven primarily by cost savings initiatives.
Third quarter collaboration profit sharing was a net expense of $45 million, primarily driven by our collaboration with Samsung <unk>.
non-GAAP other expense was $55 million.
Primarily driven by interest expense.
In the third quarter, we generated $661 million in cash flow from operations.
Expenditures were $59 million in free cash flow was $602 million.
We repurchased one 2 million shares of the company's common stock during the quarter for $250 million at an average price of $214 per share.
We ended the quarter with $5 $8 billion in cash and marketable securities $6 3 billion in debt and approximately $500 million and net debt.
Of note in the third quarter, we received net proceeds of $583 million from the sale of one of our buildings in Cambridge as part of our office footprint optimization initiatives.
Additionally, in October we paid $900 million plus fees and expenses to resolve that.
Previously disclosed qui Tam litigation.
As a reminder, we expect to receive an additional $1 $2 5 billion.
Over the next year and a half from the sale of our equity stake in Samsung bioweapon, including approximately $813 million to and.
In April of next year.
Overall, we remain in a very strong financial position with significant cash and financial capacity, including a $1 billion undrawn revolving credit facility to invest in growing the business over the long term.
Before I turn to our updated guidance, let me say a few words about <unk>.
We are excited to be collaborating with ACI on this important opportunity under a global 50 50 profit sharing agreement.
As a reminder, biogen has the right to co commercialize and co promote lacana met with ACI.
Who has final decision making authority.
After approval our share of profits or losses will be booked as a component of other revenue. The <unk> component of other revenue maybe negative in the initial quarters of launch.
Please see slide 26 in our earnings presentation for other accounting considerations.
Let me now discuss our updated full year 2022 guidance.
We are increasing our full year revenue guidance from our previous range.
Of $9.900 billion to $10 billion $100 million.
To a new range of $10 billion to $10 billion and $150 million in.
And increasing our full year non-GAAP diluted EPS guidance from our previous range of $15 25.
To $16 75 to a new range of $16 50.
Just $17 15.
This guidance increase is primarily a result of better than expected top line performance and continued cost management.
Our guidance ranges for non-GAAP R&D expense non-GAAP SG&A expense in our non-GAAP tax rate are all unchanged from prior guidance.
As a reminder, we typically see a seasonally higher SG&A spend in the fourth quarter.
This guidance assumes that foreign exchange rates as of September 30th will remain in effect for the remainder of the year net of hedging activities.
This financial guidance also assumes continued declines in rituxan revenues due to biosimilar competition as well as continued erosion of <unk> revenue due to generic entry.
Please see our press release for other important guidance assumptions.
Summary, we continued to execute well across our core business and I'm pleased to be raising our financial guidance for the year.
We are excited about the recent academy readout and believe our diversified pipeline across neuroscience specialized immunology and Biosimilars has the potential to return biogen to growth over time.
As we continue to build a multi franchise portfolio.
As always we remain focused on creating long term value for our shareholders and with that we will now open the call for questions.
If you'd like to ask a question. Please press star one on your telephone keypad as a reminder, please limit yourself to one question. If you require any further follow up you May press star one again to rejoin the queue.
Your first question comes from the line of Omar wrap it with Evercore.
Good morning, guys I had a question on the status of your relationship with East side, There's a lot of investor questions on it and I was just really curious if you could speak to sort of the status of the relationship.
If you expect ESI to allow you to commercialize them.
And that theres not been any sort of contractual disputes or anything like that thank you very much.
Thanks for the question Omar.
I can tell you that.
The relationship is very solid since many years I had the opportunity to meet and to align with my counterpart on this very regular basis, and we'll do that once more in the coming days.
The team are working together very closely.
The Copa <unk> co marketing is being discussed when we speak and is not yet determined.
But overall the relationship is sound and solid Mike do you want to add something.
No I think that covers it I would say that as we work together.
On the commercialization strategy.
Obviously ACI has final decision, making rights, but it is a 50 50 profit share and together we're excited for the upcoming <unk> presentation, where more detailed study results will be shared.
Well go to our next question from Brian Abrahams with RBC capital markets.
Hey, good morning. Thanks.
Thanks for taking my question and congrats on the quarter and another kind of that data I am curious how you envision reimbursement access for <unk> with an accelerated versus a full approval and I guess I'm wondering based on your on your partners' ongoing CMS discussions what your latest views are on by their top line results from clarity with.
Which satisfies CMS is high level evidence requirement to support NCD reconsideration in the case of an accelerated approval.
Thanks for this important question I think it all depends to the strength of the evidence we are very pleased with.
With the top topline results on the primary and secondary we are all looking forward for citizens and forthcoming publication in order to have to assess the level of evidence that will be that will be considered by CMS and that will imply the path forward for you. Thank you Michelle that's exactly right.
And I'll just add that data.
A couple of scenarios that are outlined in the NCB <unk>.
For the accelerated approval scenario.
Essentially coverage only in the situation of a randomized controlled trial, which is essentially non coverage, but for traditional approval. There is a range of Ah.
<unk> I think that the NPD indicates which is that it could be covered in the CMS approved prospective comparative study, including registry that strength and vigor that kind of study will depend on the strength and rigor of the randomized control trials that affords the final traditional approval.
So in that sense, we feel very confident about the strength of evidence as you know we met the primary endpoint with a treatment difference of four five which translated to 27% versus placebo with Makena map and also all secondary endpoints were met in a highly statistical significant manner and in addition.
And I would add that we had about 25% of underrepresented population. So we believe that it's very well designed and the results are very encouraging.
<unk> will remain to be seen and <unk> already engaging with CMS to discuss this you specifically asked about reconsideration. So I'll just add a note there that in the final scenario that NCD. The final NCD did put out was that.
CMS would act with urgency and.
Potentially a reconsolidation could be considered that could take nine to 12 months from a historic precedent perspective, but I think in that sense. They have said that they would act with urgency and that would be a full coverage without the need for prospective comparative studies. So I think we need to wait for the feed that data and continue the engagement.
Your next question comes from the line of solving that Richter with Goldman Sachs.
Good morning, Thanks for taking my question on the back of <unk> data can you just walk us through how you're thinking about business development and portfolio prioritization.
I can tell you that we do remain very active on BD.
Evaluating BD obviously the.
The portfolio.
Strong and as we said.
During the prepared remark, we have 12 phase III of filed products and we are getting prepared for Ngls.
Yes.
<unk> and PPD. So we are all very busy nevertheless business on the table because of portfolio can always be improved.
And we are evaluating every week prospects and we are making progress we've made more than 30 deals in the past years.
Two we continue to be very active and Mike. Thank you.
So I think that's a great question.
Stepping back as Michel mentioned during the remarks, we've seen we see ourselves as leaders in the Alzheimer's space. We believe that we've done a lot of evaluation of the scientific type.
Hypotheses the biology, and we have set up our portfolio to be able to address both what in terms of the biology and also the win.
So I think in terms of the biology, we've now had success with <unk>.
Obviously, we've seen the results also with <unk> and Thats the beta.
Hypothesis. In addition, we had our own study with a monoclonal antibody against <unk>, which did not work. So we did test that hypothesis with the extracellular Tau and now we are positioned to initiate a phase two will be the AP, which is an antisense oligonucleotide that will address all core.
Translational forms of Tau So we believe.
We believe we have a leading antisense oligonucleotide.
Also we have big 113 in phase, one which addresses go aggregation.
And addresses an enzymatic inhibition of aggregation. So we are really trying to tackle this from all the from the amyloid and Tau pathology basis behind that in the preclinical space. We have also several other biology that we're looking at very carefully in terms of targets and also modality.
So I think we have a very comprehensive approach and with regards to win and very pleased that we have mccann <unk> already being tested in preclinical Alzheimer's disease. So that's a study that's ongoing.
Ongoing which will address what happens when you intervene with an anti amyloid.
Hello.
Brian when you do have the amyloid aggregation when you don't have symptoms. So I think that's a very comprehensive approach we are not going to stop here. We continue to look at very attractive targets and I think BBB and internal development will continue to be important and finally with Mccann about VR testing two very important.
In our development plan.
Obviously the lead on this in the Phase two open label extension, where looking at maintenance dosing. So what's the right frequency.
<unk> continued to Brazil.
On the clinical decline production stop.
And we're looking at subcutaneous development in the phase three open label extension. So I think overall, it's very very comprehensive and I think this will be a space that we will continue to invest to win.
You.
Mike do you want to add anything to be the only thing I would just I would just quickly add is that I think you've covered it but I would just quickly add you did not see.
BD activity during the quarter in the way of new collaborations or M&A, you should not read anything into that we continue to have a very robust pipeline and we continue to look at a variety of deals it does tend to be lumpy.
And.
You should fully expect that there will be more transactions in the future. Thanks.
So as <unk> said.
Maybe.
<unk> please.
Neuro degeneration takes more prominence in our prioritization process and we are in a position to lead in <unk> and we're looking at actively actively at.
While the targets and assets, we could do we could acquire but also beyond.
We'll take our next question from Tim Anderson with Wolfe Research.
Thank you I have a question actually on <unk> home and it kind of relates to earlier comments about your role with Mccann imagine still being under.
<unk> I think a lot of folks are under the impression you've all but wash your hands.
And.
Really doing anything with at home, but from what I hear that may not be the case you are still pursuing a sub Q version of the product.
It sounds like you still may be trying to figure out a path forward to get CMS reimbursement for <unk> carriers.
And I'm wondering if that is true and if that could be a source of tension with the U Si.
Just not intuitive to me why you wouldnt be all in on Mccanna math and said why are you still may be active with agile. Thank you.
So we'll be all in on liquor together with the year with a great partners that we have and we will do everything we can to secure access of the product to the patients.
Toby process.
The less the <unk> reinforces the finding that removing aggregated form of EBITDA.
<unk> can be associated with the slowing down of the Couldnt keep decline and this is an important and this is what we have shown with <unk> and we have patients currently being dose on the <unk>.
Buck study and prayer, we say more of a that yes.
I'll actually I don't have a lot to add what I'll say is that we.
We are continuing to look at <unk> and we haven't made any decisions for now we believe that the embarq dataset is going to be very valuable to the scientific community. These are patients who've been on <unk> and an anti amyloid.
That would be for many years. In addition, we have a post marketing requirement given that <unk> was the first product to get accelerated approval.
This is called the envision study so far now both envision and embark continue.
Your next question comes from Chris Raymond with Piper Sandler.
Hey, Thanks, just maybe a related question to the last one.
So with your commercial infrastructure for out of home largely sort of wound down here.
How should we think about the ramp maybe in spend on Makena may have infrastructure.
Hum.
Come January .
Can you talk about the lessons learned.
From out of home and walk us through how your resource of this launch here as you move from a potential accelerated approval to full approval.
Yeah.
Yes. Thanks for the question I'll start and Mike will add on.
It was not reasonable based on the timeline and the gap between the <unk> NCD decision.
And the and the <unk> readout, and then a regulatory process to keep a large force onboard this would not have been reasonable. So we had no choice than to take the actions that we took now now there is a new page and together with <unk> we.
With the partners, we are assessing considering the benefits the strength relative strength of each company each continent since we intend to file for full approval.
At the same time approximately in the U S.
In Europe , and Japan should we have the accelerated approval early in the year.
We are planning.
And the investment that you are not yet completely there. So we'll do that in a very paced and controlled manner and we will take it from here Mike.
Yeah, I would just add to that.
As we continue discussions with ASI on the commercialization strategy.
It's a 50 50 profit share they have the final decision rights as we've said.
There are learnings from the Agila helm.
Situation that that obviously, we we all share openly and I would say that I do feel very highly confident that we will.
You'll see a commercial ramp in spend that we'll have much better proximity to revenue.
Then you saw an agile, but obviously there were a number of things on that John that didn't go the direction that we had anticipated but.
I do feel confident that we'll be able to gauge it in a way that.
And ASI will be able to gauge it in a way that.
The ramp in spend will have better proximity to revenue than what you saw on them.
Hi, Danielle.
Your next question and I will say.
If I may I would say that.
We have a new process ahead of us.
What we thought a couple of years ago is that an accelerated will mean product launch and this was not the case.
So here now we have a new process that was outlined and then will be very much controlled in the way we spend the company's resource.
To scale up.
Your next question comes from Matthew Harrison with Morgan Stanley .
Great. Good morning, Thanks for taking the question.
I wanted to address another question that I think we get a lot from investors, which is about the potential for certain subgroups, where populations to outperform and drive a significant part of the academy.
Top line results. So can you just maybe confirm if that was the case for example, a certain subgroup was a major driver of the response that you would have called that out in the top line or how should we think about that going in the seat that thanks.
I can take that question. Thanks for the question Matthew So overall I'll just say that.
The clarity <unk> met its primary endpoint, which was CVR sum of boxes.
And this was with a P value of <unk> 00005. So it was very very highly significant and this was a large trial. So it was about 1800 participants.
Well.
Including the underrepresented population.
And it met all secondary.
Secondary endpoints, which were independent domains of cognition and function. So overall, we feel that the results are very very positive and that they are very encouraging now details of subgroup analyses have not been shared by each side and I think we need to.
Wait for the feedback to see more details about the both the primary and the secondary endpoints, but at this point I would say that overall, we believe that.
No. We just have to wait and we feel very encouraged by what we've seen on the topline I won't be able to comment on exactly what you may or may not see I think we have to wait for that for that.
Your next question comes from Brian <unk> with Baird.
Hey, good morning, everyone. Thanks for taking my question I was wondering if you could outline any broad timeline that you have for subdue any map.
Just wondering what the pathway looks like.
Maybe youre seeking to get initial and chronic dosing approved or would this be more like initially.
Label, where you cut out patients switching who have initiated IV over a period of time and just any learnings from your interactions with FDA on subdued to Sabra that you think might be applied as we think about this pathway going forward.
Thank you Brian So overall, what I can tell you is that this is a very important part of the long term comprehensive clinical development plan for <unk> and the subcutaneous formulation development has.
They're already being pursued in the phase III open label extension, where also E.
<unk> also engaging with SBA, so there's lots of discussions ongoing.
Just say that the fees one bioavailability data has already been shared publicly so I already shared that and as I mentioned in my remarks.
Currently looking at the 70 720 milligrams weekly fixed dosing and this is being evaluated by the timelines and the details of what else the package might need that has not been shared.
And so I would say, let's wait for that to be sure and we will share that when it's appropriate but it is a very important endeavor and it is ongoing.
Your next question comes from Michael Yee with Jefferies.
Yes.
Hey, Thanks, good morning.
Back to the comments about CMS reimbursement and having to wait for <unk> CAD data I guess, maybe you could talk about what pathways or what types of interactions if any or what approach you can have with CMS to urgency whether that be patient advocacy groups. Whether you guys are working hard to do that or whether that you see.
That there is a clearly a change from the situation a year ago and they will act fast. Thank you.
So has the lead in engaging regulators and payers.
From what we know is at ESI has already initiated engagement with CMS.
So they're responsible for this activity and these data will provide more details with.
But the engagement is there which is the most important.
We'll go next to Robyn <unk> with <unk> Securities.
Thank you.
My question is two five so we're hearing a lot that Lilly has a very big presence right now and mind share of Doctor. It in this space and you mentioned, Mike that you know.
You think that will have more I'm trying to interpret what you said that youre going to ramp up.
In line with <unk>.
Revenue can you just elaborate a little bit there because you will have competitors in the space.
A small question for Korea, we also hear that how pathology that you may not want to do trials in patients that already have a beta plaque with Tao.
Hello.
Thanks.
Yeah ill just clarify the point that I made before.
As as ACI develops the commercialization strategy along with us.
Goal there obviously, the first and primary goal will be to get the launch right and put.
And infrastructure in place.
That supports the best launch possible.
And we'll be in position and obviously.
And the situation that we had with agile when we received approval in June of 2021, we had a large infrastructure that was built up and.
And ready to go and then obviously, we encountered significant delays and the point that I was making is that.
We would hope that that wouldn't be a repeat and then we would have the appropriate infrastructure to support a successful launch that's priority one and.
And then.
Hopefully, we wouldn't experience delays like that and so that you would see a spend that would ramp in front of revenue, but it wouldn't have the gap that it did on agile.
And I can add to that Robin thanks, Mike I can add to that.
In terms of doctors and mind share I think that obviously this is a very highly rapidly evolving space from a scientific perspective, and I think <unk> has demonstrated that the removal of the blocks can result in a clinical impact and this is really going to be in.
I'd also like to add that.
Safety profile is going to be really really important year.
For example, <unk> got leads of ARIA that about 21% we've seen this to be within expectations and I think that this together with the efficacy results are going to be important for doctors to consider.
Overall I think the question was a little bit more maybe about the launch I would say that the mindshare will depend on the data and I think the data needs to be seen from the other anti amyloid therapies before we decide what is going to be meaningful the other piece I think here, we see ourselves as pioneers we've got this.
Encouraging data, we think that the.
This is a very broad and complex patient population under meet an unmet need is very very high. So we think it's a very important place.
You can make a difference for patients and then Robin on the second question can you. Please clarify that I didn't quite catch it you broke up towards the end okay alright.
Alright, so for Tau pathology summit.
Sometimes it's believed that you want to clear Clark.
Before you give that house in other words, how may not work.
Although you may need to actually combine it with like Canada now that we understand the biology the thoughts on all of these trials that are ongoing including.
080, like how do you think that there is a chance that they may not work because you actually need to actually clear plaque with an a beta drug like when Canada.
Got it so I think I'll just step back to see that.
Obviously amyloid pathology is very key.
We also believe that it potentially upstream.
Apology.
Can you map with our data with that you can imagine we did show the impact on phosphorylated Tau and <unk>. So we think that this cascade overall is going to be very important having said that I think that youre right.
That may be the future of Alzheimer's disease is going to be about the timing of intervention, which I already spoke to and that's a very different model, but it could also be that one.
One type of approach may not be adequate. The question here is that we're trying to be very systematic and methodical in how we approach. It. So we've now demonstrated with Lacana map that really that is the removal of aggregated block, which results in clinical impact and I think <unk> also.
Shared earlier this year that this could result with based on data from phase two b and modeling that this could result in a presentation of about two to three years before patients progressed significantly more severe stages of Alzheimer's. This is based on modeling and data from phase two and I know that they have set pubs.
They will also do this type of analysis with the phase III data. So I think that we are making significant progress and then separately we are adapting the HP <unk>.
Had very encouraging results from a phase one b trial, maybe Sean a dose and time dependent reduction of Tau and <unk> and we believe it addresses all forms of Tau. So now we are in the process of initiating a phase two but youre absolutely right, we will be looking at many different approaches.
And how we can benefit patients.
And the best way that we can so yes, all biology is need to be considered but we need to go step wise and we need to be systematic about it.
And if I may add on the mindshare.
The PD <unk> solarge there'll be so much to be build in terms of in our secure debt.
Welcome to the efforts of other companies specifically.
Specifically about <unk> and I know that drive engage with scientific leaders some of you.
Engage with them.
Then conditions I think the feedback is very positive from what we hear and at the end of the day to BD.
Efficacy.
Six months and expanded over a period of 18 months studies and the safety that we can make the difference between between compounds, but at this stage. We welcome every effort to prepare the market for the patients in need.
Your next question comes from Jay Olson with Oppenheimer.
Oh, Hey, thanks for taking the question and congrats on the clarity results I'm curious about the potential for your collaboration with Denali and how you plan to leverage their TV platform for a beta antibodies, including <unk> can't imagine that at home now.
We have positive clarity <unk>.
Do you think better brain penetration could improve the therapeutic profile of a beta antibodies and what is the timeline to nominate a candidate from the from the television program. Thank you.
Thank you Jay.
Very good question, what I can share with you is that we are looking across our portfolio and we're looking at several of our existing partnerships to see.
How we can actually move and build on the strength of these data and the strength of the biological hypothesis that we've seen.
I can't comment more specifically on the Denali TV platform, but yes everything is on the table, we'll be looking at everything very carefully and we'll make announcements as they become irrelevant.
As it's appropriate thank you.
And we believe the product will resume its momentum growth.
U S. Overall, there was a modest decline, but if you strip out FX on a constant currency basis, there was actually growth and that growth to the points that we've made in our prepared remarks.
Great. Thanks, so much for the questions can you just talk a little bit more around the dynamics about the two week IV therapy for <unk> as we wait for the sub Q and maintenance programs I guess reimbursement aside how challenging do you think this is going to be from a commercial and infrastructure standpoint, and I know you're not talking about timing, but is this a relatively short window that.
You envision that will be using this coast current dosing paradigm more or could be dealing with this for an extended period of time. Thank you.
Okay.
So I think overall.
We've seen very good data with the 10 milligram per kg biweekly dose I think the important point.
It's very very I think relevant is.
Is that the.
The separation seen at six months as early as six months Theres No titration.
That expand on an absolute basis.
Until the 18 month primary endpoint readout in clarity.
This is very encouraging data.
Would say that.
As the infrastructure around Alzheimer's disease, and all of this is being built out it will actually be quite important for patients to be seen by physicians. So we don't see it necessarily as a disadvantage.
That was the question, we don't see it as a disadvantage.
But having said that we are doing everything ESI is leading this effort and we're trying to make sure that we're keeping patient convenience in mind, which is the premise of the.
The subcutaneous development, so I can't comment beyond that on how long you would only be intravenous and bandwidth it transition to subcutaneous, but we're looking at all of these aspects very carefully at a high level and also at a granular level as we build out the.
The clinical development program with all these topics in mind. So overall, we believe in the early stages. It is actually really important for patients to be seen in the clinic every two weeks.
Your next question comes from Paul Matteis with Stifel.
Great. Thanks, so much.
I was wondering based on your experience.
Field with Azure.
How would you characterize infusion capacity today in neurology clinics.
Head of the Cana Mab launch where is it today and how much of a ramp up do you think needs to happen for there to be materially broader access over time.
So what we so far had your head is at.
The system has shown some adaptability by shifting some of the existing intrigued infusion center to a potentially add you held them at that time should there be a reimbursement we never got reimbursement. So this never happened.
An overhaul IBD babies need to scale and the capacity has to be much larger but from my from our learning we could see that the system was flexible and adaptable based on the current capacities.
Your next question comes from Geoff Meacham with Bank of America.
Good morning, guys. Thanks, so much for the questions just a follow up on <unk> launch spending post the restructuring that you guys had earlier this year can.
Can you talk a little bit about the manufacturing assets that you can redeploy or maybe some of the commercial investments that you made for algae genome that can be reallocated for the.
I'm, just trying to get a sense for kind of the magnitude of the spend versus the <unk>.
The adoption over the course of next year.
Mike.
Yes, so a couple of comments Jeff. Thanks for the question I would say first on <unk>.
Manufacturing.
We have.
A significant facility in Raleigh, North Carolina, and then we have a.
Relatively new facility in <unk>, Switzerland.
And the solid turn Switzerland facility will be largely dedicated to.
Our alzheimers disease products, which.
For now involves a.
Ramp up of getting inventory ready for launch.
For the Academy I think we had a little over $100 million of inventory on hand as of the end of the quarter.
And the.
That facility.
Efficiency so to speak.
<unk> is heavily tied to the <unk> launch.
And then to the extent that.
Agile helm.
Becomes more marketable we could utilize that facility as well. So that's that's the state of play there there will be some idle capacity you saw about $12 million this quarter there'll be some idle capacity charges that will have to incur over time.
Has that as that product ramps.
I would say on the commercial infrastructure there is not a lot that counter will be repurposed from helm we did.
Make the decision as we've said before to take that infrastructure down there was just too long of a time.
Time gap from the time that we receive the NCD in April of 2022 to win.
<unk> would become fully commercialized.
Maintaining that infrastructure. So most of that's been eliminated as part of our.
$1 billion cost savings that we've committed.
And so for the most part the Lacana map.
Commercialization will be a new ramp and a new infrastructure that will be built.
And that includes our call for this morning. Thank you everyone for joining us.
This concludes today's call. Thank you for your participation you may now disconnect.
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Yeah.