Q1 2023 Biogen Inc Earnings Call
Speaker 1: operator today. At this time, I would like to welcome everyone to the Biogen first quarter 2021 Euro 2023 earnings call and business update.
Speaker 1: 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 would like to ask a question during this time simply press star 1 on your telephone keypad. Please limit yourself to one question and answer session.
Speaker 1: to allow other participants time for questions. If you require any further follow-up, you may press star 1 again to rejoin the queue. Today's conference is being recorded. Thank you. I would now like to turn the conference over to Mr. Jack Triano, Head of Investor Relations. Mr. Triano, you may begin your conference.
Speaker 2: Thank you, Bettina. Good morning and welcome to Biogen's first quarter, 2023 earnings call. Before we begin, I encourage everyone to go to the investors section of Biogen.com to find the earnings release and related financial tables, including our GAAP financial measures and a reconciliation of the GAAP and not the BIPOC.
Speaker 2: the ongoing economics of our business and reflect how we manage the business internally. We've also posted slides on our website that follow the discussion related to this call.
Speaker 2: I'd like to point out that we will be making forward-looking statements which are based on our current expectations. 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
Speaker 2: On today's call, I'm joined by our President and Chief Executive Officer, Chris P. Bacher.
Speaker 2: Dr. Priya Singhal, Head of Development, and our CFO Mike McDonald. Chris, Priya, and Mike will each make opening comments and then we'll move to the Q&A session.
Speaker 2: To allow us to get through as many questions as possible, we kindly ask that you limit yourself to one question.
Speaker 2: us to get through as many questions as possible, we kindly ask that you limit yourself to one question. I'll now turn
Speaker 2: Thank you, Chuck. Good morning, everybody. I'll start by first welcoming Chuck Triano as our new Head of Investor Relations. Great to have you on the team, Chuck.
Speaker 3: On our last call, we described five priorities for the business that you see on the first slide here. And during the first quarter, I think we made a lot of good progress against those five priorities.
Speaker 3: We are continuing to work toward the potential launches of the Likimbe and Alzheimer's disease and Xyranolones in both MVD and PPD. And I'm going to cover that on the next slide because that's really in some ways a super priority.
Speaker 3: On the next point on improving the risk profile and productivity of R&D, Priya will review the steps taken to improve the risk profile and the productivity of R&D, and you'll see that in greater detail. So I'm going to cover a little bit more on the cost base. The first thing I'd like to say is that we've made good progress on the previous program.
Speaker 3: that it announced a billion dollars of cost savings. Those billion dollars have been secured and that program is complete.
Speaker 3: But, you know, over the last several months, I've been getting a better understanding of how the company operates, working with our senior leaders and thinking about how we operate at all levels of the company.
Speaker 3: particularly at a global, regional, and affiliate level.
Speaker 3: And as we said before, we do have a higher cost base than the average company in our category.
Speaker 3: And so we've initiated an additional program to align our operations and cost base with the expected revenue.
Speaker 3: while leaving enough money for the upcoming launches. And we internally refer to this program as FITF for Growth. And really what we're trying to do is balance the opportunity for profitable growth by investing in our product launches and the R&D projects that we do priority.
Speaker 3: with an attempt to try to reduce that cost base and get that back to something that looks a little bit more in line with our competitors.
Speaker 3: Now, that's not just a simple job of taking out costs. What we're really trying to do is redesign the company. We have these two launches. They're going to have different geographic points of focus at the start. We won't have Zeranolone for a few years outside of the US. Zeranolone is clearly a top priority in the short term in the US.
Speaker 3: And the outside of the US, we're going to be certainly focused on the Lecambi Lodge and the Tendon.
Speaker 3: the US will be certainly focused on that can be launched in the first instance.
Speaker 3: So, one of the things we want to do is make sure that we don't lose what is good in the company and what has been working. We also have to remember that we are still a leader in multiple sclerosis. There are a lot of patients who depend upon our products and we have to make sure that the physicians who treat those patients.
Speaker 3: have adequate information. So there's a balancing act as we try to shift our resources behind the growth opportunities while still supporting our historic MS business.
Speaker 3: And so we're taking a essentially bottoms up on the methodical approach to this. This could have a much different approach to our operating model. We've been 45 years in multiple sclerosis with a limited product profile. Yes, we had at one point some products in hemophilia and obviously we have spinrods.
Speaker 3: that there's an opportunity to reduce cost, but we really are looking at something more transformational that really sets the company up for growth. We'll be able to say more about that in Q2.
Speaker 3: Then another priority is really managing the base business. There's two dynamics in the company. We are a leader in MS, but that business is increasingly affected by competition. And we have growth opportunities with McKinley and Zoranilode. So on the base business, the idea is how do we manage that business as profitably as we can.
Speaker 3: We did receive favorable decision from the court of justice of the European Union related to Tech Federer regulatory data and marketing protection, which was an important reinforcement of intellectual property and exclusivity rights. We believe this provides this marketing protection until at least February of next year.
Speaker 3: and we are looking to enforce that protection, but it'll take a little time for the market to settle. And separately, we also continue to enforce our 2028 patent protect federa in the EU.
Speaker 3: We're also looking to look into
Speaker 3: maximize the profitability of the MS franchise. Up until now, the goal has been to defend revenue at all costs. I think now we want to take a little bit more of a nuanced approach of looking at where are the opportunities in MS. Where do we have intellectual property? Where do we have still sales promotion sensitivity?
Speaker 3: and try to align our resources with that. And perhaps look at other means of promoting products that are a little less expensive.
Speaker 3: We do believe that Spin Riza can return to growth and we are seeing stabilization up there in the marketplace. Gene therapy is not for everyone and the oral therapy has its limits and there are still quite a few patients that suffer from FMA that don't benefit from any treatment.
Speaker 3: And as we announce at the previous quarter, we do have a formal process underway to evaluate strategic options for our biosimilar business. This is a very good business and I think especially with the launch of biosimilar for Humira, we are seeing an opportunity for the healthcare system to make important...
Speaker 3: economies that help fund innovation. And we need to think about who is the, and how is the best way to manage this business and who might be the best owner of that business.
Speaker 3: On external growth, we're looking at external growth really from two perspectives. One is...
Speaker 3: How do we balance the company a little bit more on its pipeline? It has been very neuroscience focused. But as I've argued in the past, I think with MS, which is basically an autoimmune disease, I think we could migrate into immunology. With Spinoza, I think we have an experience in rare diseases and that will be reinforced with, to first.
Speaker 3: And of course, we're in a North-Sochiatry with Zarenalone. So these offer opportunities to think about how do we build out some of those franchises. The other is, no, I did describe this dynamic of the MS franchise declining slightly and new growth coming.
Speaker 3: And we may look at external growth as a way of making sure that that transition is as smooth as possible from a results point of view. I'm pleased to say that we have appointed Adam Keeney as our head of corporate development. Adam has over 20 years of experience, not just in business development, but also in R&D and strategy across both large pharma and
Speaker 3: and he was the CEO of a biotech. So I think he's got some entrepreneurial spirit that will be very welcome at biogen.
Speaker 3: We do see what can be ends around alone as major contributors to revenue, but we want to continue to think about business development to support the growth trajectory and diversify, as I said. So if I could have the next slide, please.
Speaker 3: So, you know, we've really got an unprecedented opportunity. We have today a fidufe date for, to first and we have a fidufe date on July 4, McKembee and a fidufe date in August for Zerenna. I can't think of another major pharmaceutical company that has that many new significance.
Speaker 3: to be done there. And of course Serena loan takes us into a much different area and a much different position franchise.
Speaker 3: But we're making our milestones. We received accelerated approval in the US back in January . We filed for traditional approval in the US on the same day in the, and within the EU, Japan and we, and, but, Hesai initiated regulatory filing.
Speaker 3: China. You know, filing all of those dossiers in that kind of timeframe is it's really quite significant and I have to congratulate that colleagues at A-Sites of this effort. These filings have received priority review in the US Japan and China.
Speaker 3: And of course, a major milestone in that the Veterans Health Administration has decided to reimburse the Kenbi. Now, the Kenbi is going to be the first anti-Maloid antibody to receive traditional approval globally, hopefully in July . As we said, this is an on-street forward launch at the complex diagnosis involving PET scans, lump-bar, tons-
Speaker 3: expect to have an answer on once the product has received a full approval of expected following the producer date in July .
Speaker 3: More importantly though, you know, we're looking at how do we...
Right now alleviate those bottlenecks. Yes, CMS is there, but both companies are already thinking about what we can do to make this easier for patients and actually reduce cost. ASI and Viagin are pursuing maintenance dosing in the sub-Q formulation.
Blood-based diagnostics, as I said in the past, are really going to be a game changer in this space. And we believe that over time capacity is going to expand to meet the need.
For reimbursement, you know, this is a big question. The Veterans Association is certainly helpful. I would just point out that compared to the situation that Adieu Helm faced, we are getting a lot more support from Congress. The American Association of Neurologists has written in support. The Veterans Association of Neurologists has written in support.
And I know that a number of patient advocacy groups are active in ensuring that patients have access to this important therapy. So ASI is responsible under the contract for engaging with CMS and we would hope to see broad coverage coming out of the CMS decision.
Now, I'd like to talk about Zeranolone just for a few minutes. I mean, Zeranolone is still, I think, an underestimated asset in our portfolio. Unfortunately, a lot of people suffer from depression, so it is a large market.
There are clearly a number of older medicines that are available. The main problem with those are the side effects of those medicines and the length of time it takes for them to work.
And Zeranolone works potentially in three days, and it's going to be a different type of launch because we're talking about a treatment that works in two weeks. The only analog I can find that is in way similar was Zythtra Maxx. And Zeranolone works in three days, and it's going to be a different type of launch.
So we do know that there is going to be some need for education. Physicians are used to treating on a chronic basis.
As we launch even, we're going to have to think about different metrics. One of the things in a launch that you look for is when to NRX's switch to TRX's. Well, we're not going to see that. There are not going to be TRX's with the product.
So I think there are these changes in position behavior. This is a paradigm shift. And paradigm shift is not always a good thing and it's obviously a good marketing as we know.
However, what really drives us, this is a product that really makes a difference for patients. There's a product that will be efficacious, it works fast, and think about the freedom of knowing that after two weeks that you can stop taking Zoranolo. So I think that is going to be an enormous opportunity, and I'll just finish with the first on this. It is not a big product, obviously, about 300 patients.
But it's classic biogen. We have a long history in ALS, a lot of fat backs. But the organization has an ability to learn and adapt, and biogen was able to partner with the scientific community to help characterize neurofilament as a biomarker and neuromuscular disorders. This is a huge deal because neurofilament will be relevant to a lot of researchers who are looking at ALS.
as you can see here on the slide. By our Q2 call, we would expect to be in a different place with Likimbe. We should hopefully have the PDUFA date behind us successfully. Hopefully we've received a traditional approval and broader CMS coverage in the US. And of course, we'll be communicating more about our Fit for Growth cost optimization program.
By the end of this year, hopefully we've got the first ex-US approval of Lecambi in Japan, and hopefully we'll have received the approval for Zoranolome in both MDD and PPD, as well as having completed a three month DEA scheduling period and initiated the launch.
And if I look further ahead by the end of by the time this time next year.
I think we have an opportunity to build the global footprint of Lecambi with approvals in Europe and China. And of course, we'll take the next steps on evolving the treatment paradigm and Alzheimer's disease with an expected regulatory filing of can-be maintenance dosing. We would also expect regulatory filing for subcutaneous dosing, which could facilitate at-home administration.
So, in conclusion, through a combination of groundbreaking science and high potential near-term commercial opportunities, a diligent capital allocation, I think biogen is going to be well-positioned for the sustainable long-term growth. I'd like to now turn it over to Priya for an update on our progress in R&D.
Thank you, Chris. Last quarter, we made important progress advancing key pipeline programs. As Chris just pointed out, we now have the opportunity to deliver three potential new drug launches across four indications this year.
All in areas of high unmet need, including Alzheimer's disease, major depressive disorder, postpartum depression and SOD-1 ALS.
We also continue to evaluate potential opportunities for geographic and indication expansion for the RAN alone as we work with our collaborator stage to prepare for a potential U.S. launch later this year.
I will share key highlights from the quarter across broader efforts in Alzheimer's disease with the person program in Sorghaneela and the progress that we are making to rebalance the visceral file and improve productivity of the R&D pipeline.
I will now share highlights of additional analyses, Eastside recently presented or published, consistent with both companies' commitment to transparency.
First, regarding activities of daily living, new analysis of ADCS MCR ADL presented at ADPD last month.
showed that all individual idols of this scale favored the Cambie at 18 months as compared to the Seaboss.
This includes items, life, ability to make a meal or keeping appointments.
This result also mirrors clarity AD study outcome on the CDR summer boxing where the Jeremy treatment slowed decline across all six individual domain at 18 months versus the left Eunsebados PSC relentlessly, it's completelyoecical aspect of the
Additionally, results from Clarity AD show that at 18 months, the KMB treatment resulted in a 50% less decline from baseline on scales designed to assess quality of life and reduce care partner burden as compared to placebo.
In addition, was also presented an updated analysis of ARIA from the Clarity-AD study to evaluate ARIA incidents in Lecambi-Treated Participants on Anti-Platelet or Anti-Coragulant Drugs as compared to Lecambi-Treated Participants that were not on either. The results were encouraging and showed that ARIA incidents would similar as the two groups.
In addition to the data presented at ADPD, newly published analyses from Lecambi face two studies reinforced the findings that Wild Plac level begins to return slowly after treatment with discontinuation, other biomankers of AD biology.
such as Plasma A-Bera 42-40 ratio, re-accumulate quickly. We believe these findings further support the potential benefit of the continued treatment with Lecambi after blocks have been removed. Building on their prior work, E-5 published a new analysis of the long-term health outcomes associated with Lecambi treatment.
Updated analyses incorporated data from the PACE 3 Clarity 80 study, replacing the prior modeling that used PACE 2B study results.
The analysis of the phase 3 data consists of the analysis of the prior phase 2B study results showed that the can be resulted in a delay of approximately 2 to 3 years in mean time to progression to mild, moderate and severe any dementia.
versus standard of care alone. We believe these results will be upon and reinforce the significant body of evidence that has been generated on the campaign.
BioGen is committed to building on its deep expertise and experience in Alzheimer's disease by advancing and industry leading Alzheimer's pipeline. That is diversified across therapeutic modalities and molecular targets.
This includes focusing on Dow. In the cellular neurofibreling tango, which represent a pathological hallmark of Alzheimer's, a composed of hyperphosphorylated Dow-protein. The
which are observed to build up in the brain years before the onset of cognitive symptoms. Tao tangles are more closely related to the neuronal cell loss and onset of clinical symptoms. To address our pathology, we are advancing bib 80.
An anti-sensualical nucleotide targeting Zhao mRNA, aiming to reduce all forms of
Importantly, this is a very different approach than utilizing a tau directed antibody which is hypothesized to target only extracellular tau.
We were encouraged by the early results of this ASO-based approach as evidenced by the big 80s Phase 1B data in Alzheimer's disease which was presented last month at Indie PD and also published in Nature Medicine which went live online yesterday.
Phase 1B data shown here on the slide.
Baby 80 was generally well tolerated, majority of adverse events were mild or moderate in severity of which the most common were headache, back pain and post-lumber puncture syndrome.
We observed it time and dose dependent reduction in CSF total and phosphatow across the multiple ascending dose and long-term extension periods. Total tau continued to decline 16 weeks following the last dose in the mad portion of the study.
both in the high dose Q4 weekly and the Q12 weekly. And we saw a 50% reduction from baseline. It's a very, very acne-cawier treatment.
We observed its effect on neurofibulary tangles as visualized.
by a taupe as early as 25 weeks across all brain regions assessed.
Reduction and tau burden in all treatment groups at the end of the open label extension at 100 weeks.
The Bib A.T. study is the first to demonstrate this magnitude of tau-pet reduction across brain region.
Encouraged by these early results, we continue to enroll the Phase II Celia study of BFAT in early Alzheimer's disease where we are exploring different dosing regimens, including every 12 weeks and every 24 weeks dosing.
Last month, an advisory committee by the FDA met to review the first in data in Saurpon, ALS. The advisory committee unanimously agreed that reduction in plasma neurofilament light is reasonably likely to protect.
clinical benefit of the person for the treatment of SAUD-1 ALS, and they also reached a consensus that the benefit risk profile was favorable. As Krish mentioned, Vyogen has spent years collaborating with the scientific community to characterize neurofilament as a marker of exonal injury.
and neurodegenerations, and we view the outcome of the advisory committee as a significant and advancement for the field.
We believe these developments also inform our other programs in ALS, including IEP 105 and anti-sense oligonucleotide targeting a Daxxin II, which may have therapeutic potential in the broader ALS population.
With 105 aims to reduce a taxant to a protein level which we hypothesize will reduce toxic TDP 43 clusters that are observed in nearly all people living with ALS. Preclinical experiments confirm that reduction of a taxant to level modified survival.
and function in a mouse model of TDP 43 ALS. The phase 12 study of Bib 105 in ALS is expected to read out early next year.
We continue to advance our R&D prioritization efforts with the goal of optimizing the value that our pipeline can deliver.
This includes investing in areas where we have a strong conviction in the disease biology.
We continue to invest in further data generation for the Cambian Zurana loan and remain focused on executing key clinical studies, including BIM-AT and BIM-105, as well as for LITIFILA MAP in LUBIS. We also made the decision to opt-in to Denali antibody transport vehicle A beta program.
With the ATV ABETA, we aim to safely increase the OSA of ABETA antibody in the brain. This may enable improved plaque clearance and or lower incidence of area. We are also deep prioritizing programs based upon our integrated view of development.
regulatory and on commercialization challenges. Recent updates include that we decided to terminate involvement in the development of BIP93 program in large hemispheric infarction and brain contusion due to operational challenges and strategic considerations.
We decided to pause initiation of the Phase II B study of the Bib 131 in acute ischemic stroke as we reassess whether we need to initiate the study.
We discontinued BIG 132 in Spina-Serrebeller 8AXIET type 3.
We previously announced that we had refocused our investment in gene therapy and we will continue to look to advance technology associated with the safe delivery of these therapies to the right targets in the body, which we believe is one of the most critical scientific and technical challenges.
that is currently associated with this modality. We also had previously announced that we exited ophthalmology research with goals of reallocating resources to areas where we believe there is a greater probability of success. This will be an ongoing process.
involving dynamic scientific prioritization and investment based on an ongoing assessment of probability of success.
But we expect to complete our initial substantial review by media.
In conclusion, Vyajin had had a significant number of accomplishments in the past quarter.
which we believe highlight the ability of our R&D organization to capitalize and deliver on groundbreaking science in the pursuit of new medicines for patients.
With key assets in areas like Alzheimer's disease, depression, ALS and lupus, we believe the barge in pipeline has the potential to deliver significant growth over the medium and long term. I will now pass the call over to Mike for the financial results. I will now pass the call over to Mike for the financial results.
Thank you, Priya. Good morning, everyone. So I'll provide some highlights of our financial performance for the first quarter, and please note that all financial comparisons that you will hear versus the first quarter of 2022.
Total revenue for the first quarter was $2.5 billion and that's a decrease of 3% at actual currency and it's flat at constant currency. Non-GAP diluted earnings per share in the first quarter which $3.40, a decrease of 6%.
Total MS product revenue was $1.1 billion, a decrease of 19% at actual currency and 17% at constant currency. I'd like to provide a few points here regarding MS during quarter. In the U.S., we continue to see the impact of tech for the originarics, the clines and interference and competition for Taisabri.
As we noted in our last call, Q1 is typically a seasonally weaker quarter for our MS business in the US, and that's driven by higher discounts and allowances in some channel dynamics. And as a relates to channel dynamics, we did see a greater than expected decrease in channel inventory, which added a few percentage points to the overall global decline.
We believe this is likely related to tighter working capital management and wholesalers and specialty pharmacies through the rising interest rate environment. In addition, the severity of it being impacted by both pricing pressure and a contraction of the oral segment of the market in the US. And as a reminder, in Q1 of last year, the severity did benefit from a favorable Medicaid-related sales adjustment, which also impacts the year over year comparison.
As far as Europe , as you know, we received a favorable decision relating to the Techvader regulatory data and marketing protection in the EU. And that was assumed in our guidance. So we believe that Techvader is entitled to regulatory marketing protection in the EU until at least February of 2024, and we are working to enforce this protection.
I would add that we did expect it would take some time following the decision for all generic products to be off the market. And we are assuming that this exit will accelerate in the near term.
Separately, we continue to enforce our patent, which expires in 2028. So as we look toward the remainder of the year, we do expect to see a slower rate of the client on a year-over-year basis versus what we saw in Q1. We've taken some actions which aim to improve the underlying revenue trajectory for our MS portfolio in the second half, including for Pemarity in the U.S. and we're continuing to closely monitor the underlying market dynamics in MS closely.
Moving to SMA, global spinraza revenue of $443 million was a decrease of 6% at actual currency and 2% at constant currency. In the U.S., spinraza revenue decreased 10% due to fewer new patient starts and some channel dynamics as compared to the first quarter of last year.
However, we do continue to see what we believe are signs of stabilization in our patient base. Outside the US, revenue for Spinraza decreased 4% at actual currency and increased 2% at constant currency, with competition more than offset by the timing of shipments in certain markets.
Biosimilars revenue was $192 million, and that's a decline of 1% at actual currency and an increase of 4% at constant currency. And that's due to volume growth driven by the launch of our BIO-Vis product partially offset by continued pricing pressure for our anti-TNF products in Europe .
Alzheimer's disease revenue, which includes revenue from Agilem and the Lecambi collaboration equated to a headwind of $18 million to revenue as a reminder, beginning this quarter our share of Lecambi commercial expenses in the U.S. is recorded as a component of revenue thus the negative number of this quarter.
And for this line item, we expect it to continue to be negative in 2023 as ramping with can be commercialization expenses throughout the year are expected to exceed Initial revenue total anti CD 20 revenue of 399Million dollars was flat. Revenue from Ocrevus royalties increased 12%.
which was partially offset by a 25% decline in revenue from our profit share on retoxin and that was driven by biosomar competition.
The anti-CD-20 revenue line also included a $10 million offering loss related to Lensumio. I note that our R&D expense for Lensumio is also recorded as a component of the anti-CD-20 revenue line. Important to note that starting in the second quarter our pre-tax, profit share, percentage on retoxin gazada and Lensumio will decrease.
from 37.5% to 35% and that's the case with their sales targets for Gizawa as part of our contractual agreement with Genentech.
Contract manufacturing royalty and other revenue of $319 million benefited from the timing of production of some contract manufacturing batches, which includes Lecambi. While this line tends to vary from quarter to quarter, we do not expect this level of contract manufacturing revenue to continue throughout the remainder of 2023.
A couple of details regarding Q1 expenses for the first quarter, non-GAAP cost of sales was $663 million or 27% of revenue. This includes $45 million of idle capacity charges, which A side no longer shares.
During Q1, we did see pressure on cost of sales associated with product mix. We saw increased contract manufacturing revenue, which has a higher cost of sales, including manufacturing revenue for Lecambi, which is at minimal gross margin. We continue to expect our cost of sales as a percentage of revenue further remainder of the year to be higher.
than the 22.4% that we saw for full year 2022, and that's primarily as a result of product mix and idle capacity charges. First quarter non-GAAP R&D expense was $571 million. And that compares to $552 million in the first quarter of last year.
Non-GAP S-GNA was $603 million, and this compares to $635 million in the first quarter of 2022. The decrease in non-GAP S-GNA expense was driven primarily by cost savings initiatives.
Which importantly, we're partially offset by investments to support new product launches and 31M dollars related to the termination of the Co promotion agreement with. The buy ins MS products in Japan.
We continue to expect operating expenses to be lower in the second half of 2023 than in the first half. And as Chris mentioned, separate from the previously announced $1 billion cost savings initiative, we have initiated our 5th for growth program in order to align our cost base with expected revenue while also investing in our growth opportunities.
And we expect this program to have a modest impact on 2023 expenses and more meaningful impact in 2024 and beyond and we'll have more to say about this on our second quarter earnings call. As for our balance sheet, we enter the quarter with $6 billion in cash and marketable securities, $6.3 billion in debt.
and roughly $300 million in net debt. Subsequent to the end of the quarter, we received approximately $813 million related to the sale of our equity stake in Samsung Bioepis, which is not included in these cash figures.
And this payment is the second payment related to this transaction, which closed around this time last year. And we're expecting a third payment of approximately 438Million dollars in April of 2024.
In the first quarter we generated $455 million in cash flow from operations. CAPEX was $67 million free cash flow with $389 million. So overall we remain in a very strong financial position with significant cash and financial capacity to invest in growing the business over time.
Let me now turn to financial guidance for full year 2023. We are reaffirming our full year guidance of a full year 2023 revenue decline in the mid-single digit percentage range as compared to 2022 reported results. And full year 2023 non-gap diluted earnings per share of between $15 and $16.
And I would refer you to our press release for other important guidance assumptions. So, in closing, Biogen continued to make strong progress against our business priorities in the 1st quarter. We remain focused on 3 potential launches in 2023. While continuing to be diligent and prioritizing our R&D pipeline, optimizing our operating model. And also evaluating external opportunities.
We expect that execution of these priorities will position as well for returning byage into sustainable growth and creating long-term value for our shareholders. And with that, we will now open the call for questions.
Thank you. If you would 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 1 again to rejoin the queue. Our first question comes from Phil Nidow of TD Cone.
Good morning. Thanks for taking our question. Our questions on what can be reimbursement? What is biogen's expectation for reimbursement post-full approval to expect coverage with evidence development or some other form? And second, when do you think that'll be clear? Seamances suggested that.
The coverage will be revised on the day of approval. Is that going to be the final determination, or will there be subsequent revisions after that? Thank you. Chris, do we have you? You want to start?
Yes, I hope that I got off mute. Yes, thanks. So I think really new to report there, at least as far as CMS, CMS has said that following full approval that they will be making sure that the product is broadly available.
I think there will be a question of just a registry, what type of registry is there a cap on the registry that hasn't been defined at the moment. I think what really is encouraging is that we're seeing an awful lot of support being mustered and
encouragement of CMS to reimburse. As I noted earlier, the American Association of Neurologists has come out strongly in favor. As a reminder, they cited more with CMS at the time of Adry Helms, so this is a change in position. Over twice as many members of Congress have written to CMS and did for-
available. We would hope that it's not with a registry. There's no real need for a registry and we don't really see why this product wouldn't be reimbursed like any other product for Medicare but you know we're probably not going to see anything until after the PDUFA date.
We will now take a question from Paul Matzis of Stifel. Please go ahead. Thanks so much for taking my question. I wanted to follow up a little bit more on external investments as it relates to reshaping your pipeline.
Chris, you've outlined rare disease, psychiatry, and immunology historically. It would seem like if you're going to decrease the risk profile of your R&D strategy, that immunology and rare would be more than developmental side, whereas for a psychiatry aspect, you want something that was either clinically de-restored commercial.
Is that the right way to think about it and what's your appetite today for transacting before shoring up everything in-house? Thank you. Thanks, Paula. No, I think you've got that correct. I mean, you could certainly look at some tucking acquisitions on the rare side.
We have, as I noted earlier, appointed Adam as head of corporate development and business development. I think another key figure will be the appointment of a new head of research. And I would hope to have that person in place, at least by the end of the summer. Thank you.
And that personal, along with Priya and Adam, are really going to be the three that I'll be working with to think about, certainly from a licensing point of view. In terms of more transactions, I think we would be more inclined to find something that is revenue generating in the near term. If you look at biogen,
You know, really from 2025 onwards, I think the company has an ability to grow pretty significantly. But you know, in the next couple of years, that's where we're in this.
You know, the tide going out on MS and the tide coming in on new products. We obviously have a lever with cost that we can use, but external growth could also help us to manage that transition period. We will now take a quick...
how along with the KEMB. So the question is, what do you need to see and face to advance a combo, and strategically, how much of a priority I think this would be? Thank you. Thank you.
Yeah, thanks Jeff. Great question. So I'll just step back and see, you know, obviously Alzheimer's disease is a very complex disease with multiple biologies and complex pathophysiology.
We do see ourselves as pioneers in the space, and we have been successful with demonstrating the A-beta blocks as being central. And now we've shifted gears to looking at Tao. As you know, we had a lot of experience with extracellular Tao, and this was actually not successful. Because bib 92 didn't work, which was going through the map. And we had a lot of experience with the A-beta blocks.
and we have really focused now on knocking down all post-sensational eye forms of doubt. So that's what BIPAT is aiming to do. As we've shared I mean obviously these numbers are small in the phase 1B study that you know went online in a publication yesterday.
total Tao and the sustained production post-dozing. So this is very encouraging. As we kind of think about Alzheimer's leadership and we think about multiple therapies, we have to assess how Tao knock down kind of translates into clinical outcome.
Working
That's exactly how we're approaching it. Eventually, I think we do believe strongly that this is going to be a multi-modality space and patients will probably need more than one therapy. Now whether it will be combination or which way you have to determine whether it's synergistic.
or whether it could be additive, that remains to be seen. And I think we're gonna let the data drive us on many of these questions. But we're looking at all of this very, very carefully. Right now, we're focusing on downtown, all the ISO forms, as well as our phase one asset, which is big one, one, three.
which is looking at preventing sow aggregation. So that's how we're focusing our efforts. I could just follow up on that though. I think Priya, I mean, this is Priya.
We've been through the pipeline and we have deprioritized some programs. But that's not just an effort to reduce cost. It's really to be able to focus resources on those assets that we think are most promising. I can tell you, following the announcement of these results.
Sweden and then also publication of the article in Nature. There's been a lot of attention on Vid 80, particularly from neurology community. And I think this is one of those assets that we really want to focus on. We've actually already allocated more resource to accelerate this program.
And as Priya said, this is really one of the first manifestations of what it means to build a leadership position in Alzheimer's as opposed to just launching one product in the space. So, you know, most complex diseases do end up being combination therapies and, you know, there is some likelihood that that will be the case in Alzheimer's and to your point.
Good morning. Thanks for taking my question. On the Kenbee, could you discuss your strategy here with respect to infrastructure, particularly infusion centers and testing post-day potential full approval and assuming broad coverage by CMS?
Sure, thanks for the question. One of the most interesting things is that the companies actually went through a launch planning process with Adieu Helm and actually commissioned a study to actually have a look and understand what the learnings of that are.
And, you know, there's an awful lot of chicken and egg syndrome going on here. Until there's been an approved therapy and reimbursement, they're half and there's not enough investment in other areas. We see this with blood-based diagnostics, for example. It's been around, but there's no market for a blood-based diagnostic until you actually have an approved drug and a treatment.
And the same is true really for the investment in fusion capacity and PET scans and lumbar punctures and even the neurology capacity. So, you know, what we certainly are seeing is that there is a lot more interest or a lot of parties who are looking to invest in some of this infrastructure. But right now the world is almost in a point of...
Well, the starting gate is really CMS approval. One of the things that we also learned was you want to flex your commercial investment with the ability of the system to actually meet patients. I think one of the things that we would do differently and are doing differently is that at the time, by the way, it's ramped up a huge commercial machine.
in advance of reimbursement and in advance of some of that expansion. As we work with ASI, we're being a lot more prudent in looking at, okay, let's make sure we're out there, we're educating physicians, we're thinking about who's the right patient for this, and working with the different centres to make sure we know which centres have the ability to see patients and process the patients with this.
with this complex treatment paradigm. So it will expand, and I think some of that expanded already at the time of Adihome. But I do think that we'll get a better sense of where that's going once we have the confirmation of CMS is right, personally.
We will now take a question from you moreeraford.com.
We will now take a question from Yuma Ruffett of Evercore. Hello everyone.
Hi guys, good morning. Thanks for taking my question. I thought I would get some clarity on the minus 19 million in collaboration, profit share on Lecana Mab. And specifically, is there any color we can get on what the end user revenues could look like from this minus 38 million for the franchise for one queue? Even if it's a fraction of a million dollars, it would just be very helpful.
And also has Esai indicated to you on where they are or what percentage of the commercial buildout has already been baked into this one Q number or not? Because you can imagine there's a lot of investor concern around how much SGA they could possibly build into this collaboration, especially in light of some of the concerns around.
the strain relationship from the past, et cetera. Thank you very much. Thanks, and we're, Mike, do you want to take the first part of the question? I'll talk about the commercial infrastructure standard. Sure, no happy to. So, Oomer, as you know, the line item that you're referring to is the net of any revenue and, um,
commercial expense divided by two basically as you as you noted and we are we don't have a number that we're going to disclose on the revenue what I can say is there was revenue during the quarter it was minimal the majority of patients on drug are cash pay there's not reimbursement yet as you know and I think the real the real game so to speak starts when we have
Reimbursement should we get approval and get to that point? Yes. Revenue was minimal. The majority of it was cost divided by 2 and I'll let Chris speak to the ramp from here. Yeah, thanks Mike, you know, just in terms of relationship, but, you know, I was in Japan last week and the CEO , they sign, I had dinner and I think. I think our view is that the relationship and the partnership is actually working.
done, we actually, ASI has already reps out there in the field in the US. We as biogen will likely add reps at some point in the future, perhaps as early as next year, once reimbursement situation is known and the capacity increases. As I say, one of the lessons that we have to learn is that you don't want to get ahead of that. This is...
high-touch cell and customer relations at the start. I would say there's an initial investment. There'll be a second wave of investment once the CMS decision is known. And then probably a third wave of investment as the capacity builds and the patient numbers increase.
And past data would suggest it would be less safe with efficacy about the same. Is that how Biogen views the most likely outcome? Thank you. Yeah, thanks for the question. You know, I don't think we really.
Look at it that way. You know, when I think that the world changed with the clarity study, you know, if we went back two years ago, three years ago, a lot of still
doubt amongst the neurology community. Does the Amalogue Beta Hypocrites really hold water? There's been a huge debate within the community about...
about whether that's about a target or not. Clarity, I think, really starts to put that debate to rest. And the studies were done over in the case of Clarity 18 month time frame.
But actually what we're seeing is that, you know, the world has moved on. That those 18 months, you know, yes, we dramatically reduced plaque and we actually see that there is a benefit in terms of slower cognitive decline.
But you know that's not where it's going to end and in all likelihood the way this is shaping up is that you're going to have at some point a plot clearing phase