Q2 2023 Biogen Inc Earnings Call

Operator: Good morning, my name is Ruth, and I will be your conference operator today. At this time, I would like to welcome everyone to BioJune's second quarter 2023 earnings call and business update. All lines have been placed on mute to prevent any background noise.

Speaker 1: Please stand by. Good morning, my name is Ruth and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen second quarter 2023 earnings call and business update. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's 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 to allow other participants time for questions.

Speaker 1: 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 one on your telephone keypad. Please limit yourself to one question to allow other participants time for questions.

Operator: If you require any further follow-up, you may press Star One again to rejoin the queue. Today's conference is being recorded. At this time, I would now like to turn the conference over to Mr. Chuck Triano. Head of Sales, Mr. Triana, you may begin your conference. Thank you.

Speaker 1: If you require any further follow-up, you may press star 1 again to rejoin the queue. Today's conference is being recorded.

Speaker 1: At this time, Arla out now like to turn the conference over to Mr. Chuck Triano.

Chuck Triano: Thank you, operator. Good morning, and welcome to Biogen's second 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 gap financial measures and a reconciliation of the gap to non-gap financial measures that we will discuss today. Our gap financials are provided in tables one and two, and table four includes a reconciliation of our gap to non-gap financial results.

Speaker 1: Head of Nesta Relations, Mr. Triana, you may begin your conference.

Speaker 2: Thank you operator. Good morning and welcome to BioGen's second quarter, 2023 earnings call. Before we begin, I encourage everyone to go to the investor's section of bioGen.com to find the earnings release and related financial tables, including our GAAP financial measures and a reconciliation of the GAP.

Speaker 2: To non-GAAP financial measures that we will discuss today. Our GAAP financial s are provided in tables 1 and 2. And table 4 includes a reconciliation of our gap to non-GAAP financial results. We believe non-GAAP financial results better represent the ongoing economics of our business.

Chuck Triano: We believe non-gap 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 will accompany the discussion related to this call. I would like to point out that we will be making forward-looking statements which are based on our 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 additional detail.

Speaker 2: and reflect how we manage the business internally. We have also posted slides on our website that will follow the discussion related to this call. I would like to point out that we will be making forward looking statements, which are based on our expectation.

Speaker 2: 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.

Chuck Triano: On today's call, I'm joined by our President and Chief Executive Officer, Chris Buebacher, Dr. Priya Senghal, Head of Development, and our CFO, Mike McDonald. Chris, Priya, and Mike will each make some opening comments, and then we'll move to the Q&A session. To allow us to get through as many questions as possible, we kindly ask that you limit yourself to one question. I will now turn the call over to Chris. Thank you, Chuck. Good morning, everybody. I'd like to start off with Lekeme.

Speaker 2: On today's call, I'm joined by our President and Chief Executive Officer, Chris B. Bacher, Dr. Priya Senghal, Head of Development, and our CFO , Mike McDonald. Chris, Priya, and Mike will each make some opening comments, and then we'll move to the Q&A session. Allow to allow us to get through as many questions as possible. We kindly ask that you limit

Geoff Meacham: And, you know, I think before we really get into all the interesting details of commercialization and competitiveness, I would like to pause for a moment. This is an historic moment in healthcare history. We're talking about the very first disease-modifying treatment that's been approved, has received full approval from the FDA, and reimbursement from CMS. And there have been literally dozens of medicines that failed before this drug ever got to market. And that's important for a couple of reasons.

Speaker 2: and competitiveness. I'd just like to pause for a moment. This is an historic moment in healthcare history. We're talking about the very first disease modifying treatment that's been approved, has received full approval from the FDA and reimbursement from CMS.

Speaker 2: And there have been literally dozens of medicines that have failed before this drug ever got to market. And that's important for a couple of reasons. The first is that there's an awful lot we still don't know. We are really at the beginning of a journey to really understand Alzheimer's disease and how we can affect this disease.

Geoff Meacham: The first is that there's an awful lot we still don't know. We are really at the beginning of a journey to really understand Alzheimer's disease and how we can affect this disease. But it's also going to have a big impact on the practice of medicine. Physicians haven't been able to really help patients very much beyond perhaps prescribing nephazil or products like that.

Speaker 2: But it's also going to have a big impact on the practice of medicine.

Speaker 2: physicians haven't been able to really help patients very much beyond perhaps prescribing to neposil or products like that. And the treatment that we are proposing here really is going to change an awful lot of how physicians practice and treat these patients. So as we start thinking about

Geoff Meacham: And the treatment that we are proposing here really is going to change an awful lot of how physicians practice and treat these patients. So as we start thinking about intent to prescribe and how physicians are looking at things, we're actually not going to know that until we actually get out there in the marketplace and see how patients respond. Adjuhelm did get approved, but, as you all know, it never really got out of the blocks and never really got launched.

Speaker 2: intent to prescribe and how physicians are looking at things. We're actually not going to know that until we actually get out there on the marketplace and see how patients respond. Adjuhelm did get approved, but as you all know, he never really got out of the blocks and never really got launched.

Geoff Meacham: So this is really a first, and whenever you're first, we're going to be discovering an awful lot, and a lot of this is just not that predictable. I would, again, just call out kudos to our colleagues at ASI. Within a very short period of time, they were able to get regulatory filings in the EU, Japan, China, Canada, Great Britain, and South Korea. So this is going to be truly a global launch.

Speaker 2: This is really a first and whenever you're first, we're gonna be discovering an awful lot and a lot of this is just not that predictable.

Speaker 2: I would again just call out kudos to our colleagues at ASI within a very short period of time, they were able to get regulatory filings in the EU, Japan, China, Canada, Great Britain and South Korea. So this is this is going to be truly a global launch.

Geoff Meacham: Now, we just had the AIC last week, and Priya will cover a little bit more about that. But, you know, one of the things that has become obvious is that when we start looking at nanomab and lachanamab, these are two very different products.

Speaker 2: Now, we just had the AAIC last week, and Priya will cover off a little bit more about that, but you know, one of the things that has become obvious is when we start looking at the Nanomab and the Lacanomab, these are two very different products, and I don't think most people have actually really looked at that.

Geoff Meacham: And I don't think most people have actually really looked at that. Most people are looking at, okay, we've got an A-Beta antibody, and we're moving plaques. But there's a whole lot more to this story, and this is going to evolve over the next months and years. These are different products. They have different mechanisms because they have different binding.

Geoff Meacham: They've been studied in different populations. They've been studied with different clinical study design. design approaches and of course they have a very different safety profile and all of these differences are going to play out over in the marketplace over the coming months and years and it'll be interesting to see how that is but I would I would just caution everybody as we get into this and you see all of the data there's a there's an awful lot of subtlety to this and and it's going to be quite interesting from a commercial point of, The launch is underway in the U.

Speaker 2: because they have different binding. They've been studied in different populations. They've been studied with different clinical study design approaches. And of course, they have a very different safety profile. And all of these differences are gonna play out in the marketplace over the coming months and years. And...

Geoff Meacham: We did get full approval earlier this month and CMS approval. That has significance for others. This is going to encourage a lot of other companies to be investing in research and blood diagnostics. But it's also, as you know, going to be an unusual launch.

Speaker 3: We did get for the approval.

Speaker 2: earlier this month and CMS approval. That has significance also for others. This is going to encourage a lot of other companies to be investing in research and blood diagnostics. It's also, as you know, going to be an unusual launch. There's an awful lot that has to be done.

Geoff Meacham: There's an awful lot that has to be done. We're going to have patient navigators to help navigate the process to understand how treatment will occur, and get reimbursement. We will be working with physician offices. An awful lot of children.

Speaker 2: We're going to have patient navigators to help navigate the process to understand how treatment will occur getting reimbursement. We will be working with physician offices, not a lot of change will have to occur in the practice and their practices on a day-to-day basis.

Geoff Meacham: change that will have to occur in the practice. So, they practice on a day-to-day basis. There's an awful lot of education around safety, making sure that the right patients are in place. We have reached out to about 700 centers today. We're also getting reimbursement beyond CMS. We have Medicaid, for example, in 48 out of the 50 states so far, and we have had a very good response from commercial insurers. So I think the launch of Kempia is off to a very good start and will, of course, keep you up to date as we get further information. I'll move on to another slide now.

Speaker 2: There's an awful lot of education around safety, making sure that the right patients are in place. We have reached out to about 700 centers to date.

Speaker 2: We're also getting reimbursement beyond CMS. We have Medicaid, for example, and 48 out of the 50 states so far. And we have had very good response from commercial insurers. So I think the launch of the Kenbi is off to a very good start and we'll of course keep you up to date as we get furthering.

Geoff Meacham: One of the things that we've been doing an awful lot in the past months is really making sure that we are well positioned for growth. And as we looked at the company, that's where we were. As you know, today, we have a relatively mature product profile. Generally, when you have a mature product profile, you'd expect the level of investment to go down. We actually have relatively high operating expenses when we benchmark versus other companies.

Speaker 2: As you know, today we have a relatively mature product profile. Generally, when you have a mature product profile, you'd expect a level of investment to go down. We have actually relatively high operating expenses when we benchmark versus other companies. Part of that is an over investment in legacy products.

Geoff Meacham: Part of that is an overinvestment in legacy products, but we also have extremely centralized governance. We've got many organizational levels. We have a low span of control. On average, we have a span of control of three.

Speaker 2: But we also have an extremely centralized governance. We've got many organizational levels. We have a low standard control, an average we have a standard control of three.

Geoff Meacham: And then as we looked at the R&D pipeline, you know, we've had five different heads of R&D in 10 years. And that's not good for an R&D organization. And as a result, we ended up with some products that I think were relatively high risk and high cost and not necessarily of the highest value. So we've gone through an extensive project to really review those for the pre-d programs. And as we looked at, well, where do we want to be? Well, we want to be making more value-based decisions about existing products. We don't just remove the promotional effort entirely. Viagin is still 25% market share in multiple sclerosis.

Speaker 2: And then as we looked at the R&D pipeline, you know, we've had five different heads of R&D in ten years. And that's not good for an R&D organization. And as a result, we ended up with...

Speaker 2: With some products that I think were relatively high risk and high cost and not necessarily of the highest value. So we've been through an extensive project to really review those ICEu unst WHAT

Speaker 2: And as we looked at, well, where do we want to be? Well, we want to be making more value-based decisions for existing products. We don't just remove the promotional effort tightly. Biogen is still 25% market share in multiple sclerosis. We have the highest market share by considerable margin.

Geoff Meacham: We have the highest market share by a considerable margin, and so there are an awful lot of patients who depend on our Viagint products, but I think we can do that smarter. There's a need, obviously, to have strong investment in our new product law. It's clearly important to manage costs, but shareholder value is most optimized if we can really make a success of these marches.

Speaker 2: And so there are an awful lot of patients who depend on Biogen products, but I think we can do that smarter.

Speaker 2: There's a need obviously to have strong investment in our new product launches. It's important clearly to manage costs, but shareholder value is most optimized if we can really make a success of these launches. We need to get decision making closer to customers. We want greater agility in the organization.

Geoff Meacham: We need to get decision-making closer to customers. We want greater agility in the organization, and we want to focus on high-value projects in R&D. External growth will really give us the opportunity to diversify away from rare diseases and diversify into rare diseases, immunology, and psychiatry. So we did this redesign effort. What we did was a bottom-up exercise to look at where we need to be as a comfort level, successfully launch certain products, and what kind of internal governance mechanisms do we want. What kind of metrics do we want? What kind of accountability?

Speaker 2: that we want to focus on high-value projects in R&D. External growth will really give us the opportunity to diversify ways from rare diseases, diversify into rare diseases, immunology and the supply of treatment.

Speaker 2: So we did this redesign effort. What we did was a bottom-up exercise to look at where do we be as a country?

Speaker 2: successfully launched in products. What kind of internal governance mechanisms do we want? What kind of metrics do we want? What kind of accountability? And so there's been a, say, a complete redesign of, of, of biogen. And that will lead some cost savings. There are gross cost savings, which will be about a billion dollars in annualized, um,

Geoff Meacham: And so there's been a, say, a complete redesign of Biogen, and that will lead to some cost savings. There are gross cost savings, which will be about a billion dollars in annualized savings per year. Of that, we expect to invest at least 300 million in growth opportunities going forward. So this is an opportunity really to make sure this year, before we get into the product launches, that we are truly fit for growth. And with that, I'll turn it over to PREA.

Priya Singhal: We believe that the traditional approval of Lekembe is a significant milestone for the Alzheimer's field. However, we also recognize that the pursuit of effective therapies for Alzheimer's is far from over. Biogen and ASEI are continuing to generate data on Lekembe across the Alzheimer's disease continuum. Ameloid pathology can begin years before the onset of symptoms.

Speaker 2: that we were truly fit for growth and with that, I'll turn it over to Priya.

Speaker 4: Thank you, Chris.

Speaker 4: We believe that the traditional approval of Lecambi is a significant milestone for the Alzheimer's field. We also recognize that the pursuit of effective therapies for Alzheimer's is far from over. Biogen and ASI are continuing to generate data on Lecambi across the Alzheimer's disease continuum. We believe that the use of the Lecambi in the Alzheimer's disease continuum is a significant milestone for the Alzheimer's disease continuum. We believe that the use of the Lecambi in the Alzheimer's disease continuum is a significant

Priya Singhal: There is the potential to maximize the therapeutic effect of Lekemby by treating earlier to delay or even prevent the onset of Alzheimer's. Pesai and Biogen initiated the Ahead 345 trial in 2020 to evaluate this. This consists of two sister trials, incognitively unimpaired individuals aged 55 to 80, with intermediate or elevated levels of amyloid on PET screening, and they will be evaluated over 48 months. With the approval of Lecombe in the U.S., we also modified our protocol for the ahead trial to allow for open-label Lecombe Rescue should patients progress to early AD while being enrolled in the trial.

Speaker 4: Amaloid pathology can begin years before the onset of symptoms.

Speaker 4: There is the potential to maximize therapeutic effect of Lekembe by treating earlier to delay or even prevent the onset of Alzheimer's.

Speaker 4: E-Sign and Biogen initiated the AHEAD 345 trial in 2020 to evaluate this approach.

Speaker 4: This consists of two sister trials, incognitively and unimpaired individuals aged 55 to 18 with intermediate or elevated levels of amyloid on pet screening, and they will be evaluated over 48 months.

Speaker 4: With the approval of the KEMB in the US, we also modified our protocol for the ahead trial to allow for open label, the KEMB rescue should patients progress to early in the while being enrolled in the trial.

Priya Singhal: We believe the clinical profile of Lecombe is uniquely suited for the early intervention approach, with robust plaque clearance, low incidence of aria, and optionality of longer duration treatment to potentially maximize clinical benefits. We are working to improve and simplify the patient journey for Le Camry in the early 80s.

Speaker 4: We believe the clinical profile of Lakambi is uniquely suited for the early intervention approach.

Speaker 4: with robust block clearance, low incidence of ARIA, and optionality of longer duration treatment to potentially maximize clinical benefit.

Priya Singhal: We have two areas of focus; a subcutaneous formulation where the auto injector to potentially enable at-home administration is underway. ESI recently presented modeling data at AIC, suggesting that subcutaneous lichanamap provides similar exposure and amyloid plaque reduction as the biweekly IV formulation, but with a potential for lower incidence of aria. Regulatory filing is expected by the end of Q1, 2024. Second, maintenance dozing, evaluating less frequent maintenance dozing in the phase two open-label extent. Regulatory filing is also expected by the end of Q1, 2024.

Speaker 4: We are working to improve and simplify the patient journey for the chem in early AD.

Speaker 4: We have two areas of focus. A subcutaneous formulation, where the auto injector to potentially enable at-home administration is underway.

Speaker 4: IISI recently presented modeling data at AAIC, suggesting that subcutaneous lecanomab provides similar exposure and amyloid plaque reduction as bi-weekly IV formulation, but with the potential for lower incidence of ARIA.

Speaker 4: Regulatory filing is expected by the end of Q1 2024. Second is maintenance doling, evaluating less frequent maintenance doling in the phase two open label extension.

Priya Singhal: We are also continuing to analyze the Clarity AD data, where we have observed consistent reductions in both amyloid and tau PET and improved clinical outcomes as we aim to better inform treatment decisions for patients. The Clarity AD study did not use baseline tau-pet as an exclusion criteria and enrolled a broad population of early AD patients with varying degrees of tau pathology at baseline. This important aspect of the Clarity AD study allowed the generation of data on individuals with low-tow burdens that have not been collected in other Phase 3 programs.

Speaker 4: Regulatory filing also expected by the end of Q1 2024.

Speaker 4: We're also continuing to analyze the clarity AD data, where we have observed consistent reductions in both amyloid and tau-bet and improved clinical outcomes as we aim to better inform treatment decisions for patients.

Speaker 4: Clarity AD study did not use baseline tau-peth as an exclusion criteria and enrolled a broad population of early AD patients with varying degrees of tau pathology at baseline. This important aspect.

Speaker 4: of the Clarity AD study allowed the generation of data on individuals with low tower burdened that has not been collected in other phase 3 programs. The Clarity AD study allowed the generation of data on individuals with low tower burdened that has not been collected in other phase 3 programs.

Priya Singhal: At AAIC, ESI presented baseline characteristics and a new analysis containing the initial results from the TauPET sub-study of Clarity AD. In this analysis, individuals enrolled in the Tao Pet sub-study were categorized into high, medium, and low groups based upon tau burden measured at baseline. Lecanomab administration showed a clinical effect in the overall population of the Tau pet sub-study, and notably, a large effect size was also observed in the low-tow population defined in this analysis, which does represent the early phase of AD.

Speaker 4: At AAAIC, ESI presented baseline characteristics and in new analysis, containing the initial results from the CiaoPEP sub-study of Clarity AD. And the final result from the final results from the CiaoPEP sub-study of Clarity AD.

Speaker 4: In this analysis, individuals enrolled in the TAU-PEP sub-study were categorized into high, medium, and low groups based upon TAU burden measured at baseline.

Speaker 4: L'Ecanomabinment Stration showed a clinical effect in the overall population of the taupec sub-study and notably a large effect size would also observe in the low-down population defined in this analysis.

Priya Singhal: We believe this data further supports the clinical benefit observed with Lecombe in the broad early AD population and again emphasizes the importance of treating patients early. Biogen plans to build upon its industry-leading position in therapeutics for A-Beta clearance and TOW knockdown by advancing a multi-target, multi-modality portfolio, inclusive of also other emerging targets in the Alzheimer's disease pathway. This is inclusive of programs targeting Tao.

Speaker 4: which does represent the early phase of AD.

Speaker 4: We believe this data further supports the clinical benefit observed with Lecambi in the broad early AD population and again emphasizes the importance of treating patients early.

Speaker 4: Biojun plans to build upon our industry leading position in therapeutics for A beta clearance and down, down by advancing a multi-target, multi-modality portfolio, inclusive of also other emerging targets in the Alzheimer's disease pathway.

Priya Singhal: Bib 80 of Phase 2, targeting anti-solibonucotide, and B1113, a phase one small molecule aiming to prevent tau acquisition. Turning to SMA, the interim results from the response study were presented at the Cure SMA conference recently and highlight that most participants at Investigator and caregiver reported suboptimal clinical status across multiple domains at baseline following Soljema treatment. This included motor function, swallowing, or feeding ability, and respiratory functions

Speaker 4: This is inclusive of program targeting Tao. Bebe A.T. A phase two targeting adjacent oligoneucleotides. And BIM 113, a phase one small molecule aiming to prevent Tao activation.

Speaker 4: Turning to SMA, the interim results from the response study were presented at the Cure SMA conference recently and highlight that most participants are an investigator and caregiver reported suboptimal clinical status.

Speaker 4: across multiple domains at baseline following full-resma treatment. This included motor function, following of feeding ability and respiratory function.

Priya Singhal: Potentially, we believe this is due to likely incomplete transduction of motor neurons following gene therapy administration. The internal results at six months showed improvements in motor function in most participants, as measured by the increased total hind two score from baseline, with no new emerging safety concerns identified. Overall, we believe these results suggest that there may be potential for additional benefit with Spinraza treatment following Solgeist administration. The R&E organization, as Chris mentioned, has spent significant time and energy over the last several months conducting a comprehensive review of Biogen's R&D programs as we aim to improve the risk profile and productivity of the pipeline.

Speaker 4: Potentially, we believe this is due to likely incomplete transduction of modern neurons following the Gene Therapy Administration. we look at the genehaly Swiss teaching,jenrenundin, sna scarce transmission and not do tickets for a test,

Speaker 4: The internal results at six months.

Speaker 4: So, improvements in motor function in most participants as measured by the increased total time to score from baseline, with no new emerging safety concerns identified.

Speaker 4: Overall, we believe these results suggest that there may be potential for additional benefit with Spinraza treatment following Soljesma treatment administration.

Speaker 4: The R&D organization, as Chris mentioned, has spent significant time and energy over the last several months in conducting a comprehensive review of BioGEM's R&D program as we aim to improve the risk of file and productivity of the pipeline.

Priya Singhal: We made a number of significant decisions and identified the programs we want to prioritize, and others where we assessed the challenges resulted in a low probability adjusted return on investment and thus were promptly modified or discontinued. We believe that this has resulted in a leaner pipeline with an overall greater probability of success and a sharper focus on key programs. The examples shown here all have data readouts expected over the next few years.

Speaker 4: We made a number of significant decisions and identified the programs we want to prioritize and others where we assess the challenges resulted in a low probability adjusted return on investment and thus were promptly modified or discontinued. We believe that this has resulted in a leaner pipeline.

Speaker 4: with an overall greater probability of success and a sharper focus on key programs.

Priya Singhal: VVET, a phase 2 targeting Tau targeting ASO, which has one phase 1B data showing a time and dose-dependent reduction in CSF total tau and phospho-tow, as well as tau tangles visualized by a tau pet. Lytopalamap, a subcutaneous anti-BDCA2 antibody currently being evaluated in two phase three studies in systemic lupis erudomatosis and a phase two, three study in cutaneous lupus erythomythosis.

Speaker 4: The examples shown here all have data readouts expected over the next few years.

Speaker 4: BBT, a phase 2 targeting tau targeting ASO, which has phase 1b data showing a time and dose dependent reduction in CSF total tau and phospho tau, as well as tau tangles visualized by a tau pet.

Speaker 4: Littifilamab, a subcutaneous anti-BDCA2 antibody, currently being evaluated in two phase three studies in systemic lupus erythematosus and a phase two three study in cutaneous lupus erythematosus.

Priya Singhal: Bib 105 and ATAX through ASO are being evaluated in a phase one-two study in broad sporadic ALS; we expect a readout mid-year 2024. Bib 122, a LAC2 ASO being developed in partnership with Denali therapeutics, currently in a phase 2 study for idiopathic Parkinson's disease. And Bib 121, an ASO aiming to increase the expression of paternal UB3A Injuman Syndrome, and we expect the phase one to read out mid-year 2020. In summary, this past quarter, we continued to make significant advancements across our pipeline, most notably with the traditional approval of Lecombe in early 80.

Speaker 4: The 105 and 8 access to ASO being evaluated in a phase 1, 2 study in bronze sporadic ALS. We expect a readout mid year 2024.

Speaker 4: BIB 122, a LAC2 ASO being developed in partnership with Denali Therapeutics, currently in a Phase IIB study for idiopathic Parkinson's disease. And BIB 121, an ASO aiming to increase the expression of paternal UV3A in Angelman syndrome CR Politics

Speaker 4: and we expect the phase one to read out May 24.

Speaker 4: In summary, this past quarter, we continue to make significant advancements across our pipeline.

Priya Singhal: While our initial substantial review of the pipeline is complete, we will continue to evaluate both current and potential new R&D programs using a data-driven approach with a keen eye toward risk balance and value creation. I will now pass the call over to Mike.

Speaker 4: Most notably, but the traditional approval of Lecambi in early AD.

Speaker 4: While our initial substantial review of the pipeline is complete, we will continue to evaluate both current and potential new R&D programs using a data-driven approach with a keen eye toward risk balance and value creation.

Michael R. McDonnell: Thank you, Priya, and good morning, everyone. I'll provide some highlights in color regarding our financial performance for the second quarter, and all of the financial comparisons that you will hear are versus the second quarter of 2022. Total revenue for the second quarter was $2.5 billion, which is a decrease of 5% at actual currency and 3% at constant currency. Non-Gap diluted earnings per share in the second quarter were $4.2.

Speaker 4: I will now pass the call over to Mike.

Speaker 2: Thank you, Priya, and good morning everyone. I'll provide some highlights and color regarding our financial performance for the second quarter and all of the financial comparisons that you will hear are versus the second quarter of 2022.

Speaker 2: Total revenue for the second quarter was $2.5 billion. That's a decrease of 5% at actual currency and 3% at constant currency.

Michael R. McDonnell: Total MS product revenue was $1.2 billion. That's a decrease of 15% at actual currency and 14% at constant currency. So, a few recent updates to the MS business this quarter. First, the decline in MS revenue in the second quarter was attributable to generic entry for Tech Federa and broad competition in the MS market. We did not see much in the way of channel dynamics during the second quarter.

Speaker 2: non-GAAP diluted earnings per share in the second quarter was $4.02.

Speaker 2: Total MS product revenue was $1.2 billion. That's a decrease of 15% at actual currency and 14% at constant currency.

Speaker 2: So, a few recent updates to the MS business this quarter. First, the decline in MS in the second quarter was attributable to generic entrance for Techfedera and broad competition in the MS market. We did not see much in the way of channel dynamics during the second quarter. Second, as we did announce previously, Techfedera's regulatory market.

Michael R. McDonnell: Second, as we did announce previously, Techvedere's regulatory market protection in the EU was extended by one additional year until February 2nd, 2025. Some of the Tech Federa generics have not yet fully exited some of the EU markets, and some generic products remain in the channel. The pace of generic withdrawal has been slower than we expected, and we're closely monitoring this situation and working to enforce our legal right to market protection.

Speaker 2: been slower than we expected and we're closely monitoring this situation and working to enforce our legal right to market protection.

Michael R. McDonnell: Regarding Tysabri, we have previously said that there may be a Tysabri biosimilar launch in the U.S. and EU sometime later in 2023. We are aware of the positive CHMP opinion for the Tysabri biosimilar in the EU last week.

Speaker 2: Regarding Tysabri, we have previously said that there may be a Tysabri biosimilar launch in the U.S. and EU sometime later in 2023. We are aware of the positive CHMP opinion for the Tysabri biosimilar in the EU last week.

Michael R. McDonnell: And while we have not seen any biosimilar launches so far, we could see an approval and launch in the coming month. Moving on now to SMA, global spin-Raza revenue of $437 million increased 1% at actual currency and 5% at constant currency. Benrara growth in the U.S. was 12 percent, and that was driven by patient growth. We were encouraged by the performance this past quarter and believe we are making good progress against our goal of returning Spinrazha to consistent growth.

Speaker 2: And while we have not seen any biosimilar launches so far, we could see an approval and launch in the coming months.

Speaker 2: Moving on now to SMA, global Spinraza revenue of $437 million increased 1% at actual currency and 5% at constant currency.

Speaker 2: Binraza growth in the US was 12% and that was driven by patient growth.

Speaker 2: We were encouraged by the performance this past quarter. And believe we are making good progress against our goal of returning spin rasa to consistent growth.

Michael R. McDonnell: Also, as Priya mentioned, we are continuing to generate data to support the efficacy profile of SpinRaza, and we believe that this, along with the expected overall market expansion, should help enable continued improved performance for SpinRaza. Biosimilar's revenue of $195 million was flat at actual currency and increased 4% at constant currency. We are continuing to manage supply constraints for Emeraldi and Benipoli and are monitoring this situation very closely.

Speaker 2: Also, as Priya mentioned, we are continuing to generate data to support the efficacy profile of Spinraza, and we believe that this, along with the expected overall market expansion, should help enable continued improved performance for Spinraza.

Speaker 2: Biosimilars revenue of 195 million dollars was flat at actual currency and increased 4% at constant currency.

Michael R. McDonnell: We've referenced previously that we are evaluating whether this business could create more value outside of Biogen, and we are engaged with multiple interested parties and will provide further updates on that process as appropriate. Alzheimer's disease revenue, which includes revenue from Adjahelm and the Lecombe collaboration, equated to a headwind of $20 million to revenue during the second quarter. As a reminder, Lecombe revenue represents our 50% of in-market revenue less 50% of commercialization expenses.

Speaker 2: We are continuing to manage supply constraints for Imraldi and Benipali and are monitoring this situation very closely. We've referenced previously that we are evaluating whether this business could create more value outside of Biogen. And we are engaged with multiple interested parties and will provide further updates on that process as appropriate.

Speaker 2: Alzheimer's disease revenue, which includes revenue from Agihelm and the Lekembe collaboration equated to a headwind of 20Million dollars to revenue during the 2nd quarter. As a reminder, Lekembe revenue represents our 50% of in-market revenue, less 50% of commercialization expenses.

Michael R. McDonnell: We expect this line to continue to be negative in 2023 as the ramping of Lecomber commercialization expenses will exceed initial revenue. Total anti-CD20 revenue of $433 million was down 1% and included a $12 million operating loss related to Lunsumio.

Speaker 2: We expect this line to continue to be negative in 2023 as the ramping of the can be commercialization expenses will exceed initial revenue.

Speaker 2: Total anti-CD20 revenue of $433 million was down 1% and included a $12 million operating loss related to L'Anseumio.

Michael R. McDonnell: As a reminder, starting this quarter, our pre-tax profit share on Rituxin, Gazeva, and Lensumio decreased from 37.5% to 35%. And that's due to the achievement of certain sales targets for Gizaiva as part of our contractual agreement with Genentec. Contract Manufacturing, royalty, and other revenue of $198 million was notably higher year over year, and that was driven mainly by the timing of batches. A couple of details regarding Q2 expenses. For the second quarter, non-gap cost of sales was 24% of total revenue, and that included $34 million in idle capacity charges.

Speaker 2: As a reminder, starting this quarter, our pre-tax profit share on Rituxan, Gaziva, and Linsumio decreased from 37.5% to 35%. And that's due to the achievement of certain sales targets for Gaziva as part of our contractual agreement with Genentech.

Speaker 2: Contract manufacturing, royalty, and other revenue of $198 million was notably higher year over year, and that was driven mainly by the timing of batches.

Speaker 2: A couple of details regarding Q2 expenses. For the second quarter, non-GAAP cost of sales was 24% of total revenue, and that includes $34 million of idle capacity charges.

Michael R. McDonnell: We continue to see higher costs of sales as a percentage of revenue as a result of product mix and idle capacity charges, and in particular, the increases that we are seeing in contract manufacturing revenue increase our overall cost of sales as a percentage of revenue. So in terms of modeling for the remainder of 2023, I'd offer that we believe contract manufacturing revenue will remain strong and will contribute to a higher cost of sales as a percentage of revenue for the remainder of this year as compared to the 24.1% that we saw in the second quarter.

Speaker 2: We continue to see higher cost of sales as a percentage of revenue as a result of product mix and idle capacity charges. And in particular, the increases that we are seeing in contract manufacturing revenue increases our overall cost of sales as a percentage of revenue.

Speaker 2: So, in terms of modeling for the remainder of 2023, I'd offer that we believe contract manufacturing revenue will remain strong and will contribute to a higher cost of sales as a percentage of revenue for the remainder of this year as compared to the 24.1% that we saw in the second quarter.

Michael R. McDonnell: Second quarter non-gap R&D expense includes roughly $13 million in estimated study closeout costs related to Bid 93. As Priya mentioned, we're now substantially complete with our R&D prioritization. We estimate that this will result in gross savings of approximately $250 million next year, though this will be partially offset by natural increases in R&D due to portfolio progression. The decrease in second quarter SG&A expense was attributed to roughly $70 million of savings initiatives, and that was partially offset by approximately $35 million of reinvestments, mostly related to launch costs.

Speaker 2: Second quarter non-GAAP R&D expense includes roughly $13 million in estimated study closeout costs.

Speaker 2: related to BID 93. As Priya mentioned, we're now substantially complete with our R&D prioritization.

Speaker 2: We estimate that this will result in gross savings of approximately 250 million dollars next year. So this will be partially offset by natural increases in R&D due to portfolio progression.

Speaker 2: The decrease in second quarter SG&A expense was attributed to roughly 70M dollars of savings initiatives and that was partially offset by approximately 35M dollars of reinvestments, mostly related to launch costs. We continue to expect our operating expenses to be lower in the second half of the year than in the first half of the year.

Michael R. McDonnell: We continue to expect our operating expenses to be lower in the second half of the year than in the first half as we complete the run rate savings from our previously announced cost initiatives, as well as a modest impact from our new Fit for Growth initiatives. Now, I'd like to take a minute to provide a little bit of additional detail on our new Fit for Growth program. This program will include changes to our operating model with a significant reduction of certain centralized functions.

Speaker 2: This program will include changes to our operating model with a significant reduction of certain centralized functions.

Michael R. McDonnell: A substantial portion of the $700 million of net annual OPEC savings is expected to come from a net head count reduction of approximately 1,000, which we expect to right-size the company with our business plan and enable us to return to sustainable growth. I would reiterate that the OPEC savings shown here are on an annualized basis. We believe that this is an efficient program with 70% of our expected gross OPEC savings to be realized at net savings, call in. We expect a very modest impact on 2023 expenses and believe the net OPEC savings will be split roughly equally between 2024 and 2025.

Speaker 2: A substantial portion of the 700M dollars of net annual OPEX savings are expected to come from a net headcount reduction of approximately 1000. Which we expect to right size the company with our business plan. And enable us to return to sustainable growth. I would reiterate that the OPEX savings shown here are on an.

Michael R. McDonnell: And all of these savings are incremental to any previously announced cost reduction program. A few quick comments on our balance sheet, including the approximately $813 million that we received during the quarter related to the sale of our equity stake in Samsung Bioepis. We ended the quarter with $7.3 billion in cash and marketable securities. On June 30th, we had $6.3 billion in debt, and that puts us in a net cash position of roughly $1 billion.

Speaker 2: And all of these savings are incremental to any previously announced cost reduction progress.

Speaker 2: A few quick comments on our balance sheet, including the approximately 813M dollars that we received during the quarter related to the sale of our equity stake in Samsung BioEpsis. We ended the quarter with 7.3Billion dollars in cash and marketable securities.

Speaker 2: On June 30th, we had $6.3 billion in debt. And that puts us in a net cash position of roughly $1 billion. We continue to generate steady positive cash flow from operations with free cash flow of $416 million during the second quarter.

Michael R. McDonnell: We continue to generate steady positive cash flow from operations with free cash flow of $416 million during the second quarter. And finally, now, let me turn to our financial guidance for the full year 2023. The business remains on track with our forecast for the full year. And today, 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-dap diluted earnings per share of between $15 and $16, and you can refer to our press release for other important guidance assumptions. So now I'll turn it back over to Chris for a few closing comments. Thank you, Mike.

Speaker 2: And finally, now let me turn to our financial guidance for full year 2023. The business remains on track with our forecast for the full year.

Speaker 2: And today 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.

Speaker 2: and full year 2023 non-GAAP diluted earnings per share of between $15 and $16. And you can refer to our press release for other important guidance assumptions.

Geoff Meacham: Well, in addition to re-engineering our cost base, we're actually also re-engineering the marketed portfolio products. We've already had two approvals this year, and Kempi in the United States. As we look forward for the rest of the year and into early next year, we have a number of other important milestones for our portfolio. We are expecting a decision by the PMDA in Japan in the third quarter and by the EMA in Europe in the first quarter of next year.

Speaker 2: Thank you, Mike. In addition to re-engineering our cost base, we're actually also re-engineering the marketed portfolio products. We've already had two approvals this year.

Speaker 2: with health city and can be in the United States. As we look forward for the rest of the year and into early next year, we have a number of other important milestones for our portfolio. We are expecting a decision by the PMDA in Japan in third quarter, by the EMA in Europe in the first quarter of next year.

Geoff Meacham: And in the first quarter of next year, also in China. We are also expecting a decision by the FDA. on the Ranolone, actually, next week, potentially. And then we also are continuing to evolve the Kambi, as Priya said, we are expecting to be able to submit regulatory dossiers for Lecombe sub-Q in Q1 of next year, and also a regulatory file for maintenance dosing next year. So, and in addition to that, with the new product approvals that are expected, we're going to continue, obviously, to look through our external growth opportunities.

Speaker 2: And in the 1st quarter of next year also in China. We also are expecting a decision by the FDA on the rent alone. Actually, next week, potentially. And then we also are continuing to evolve the can be as.

Speaker 3: Priya said we are expecting to be able to submit.

Speaker 3: The regulatory dossiers for Lecambie sub-Q in Q1 of next year and also a regulatory final maintenance dosing next year. So, in addition to that, with the new product approvals that are expected, we're going to continue obviously to look through our external growth opportunities.

Geoff Meacham: As I have said before, this is an opportunity to expand the portfolio more into rare diseases and immunology and neuro-psychiatry. So with that, Chuck, we'll turn it back and invite questions. Thanks, Chris. Operator, can we please poll for questions?

Speaker 3: As I have said before, this is an opportunity to expand the portfolio more into rare diseases, into immunology and neuropsychiatry. So with that, Chuck, we'll turn it back and invite questions. Thanks, Chris. Operator, can we please poll for questions?

Operator: Yes, 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. Your first question comes from the line of Brian Abrahams with RBC Capital Markets.

Speaker 1: If you would like to ask a question, please press star 1 on your telephone keypad. As a reminder, please limit yourself to one question.

Speaker 1: If you require any further follow up, you may press star 1 again to rejoin the queue. Your first question comes from the line of Brian Abrahams with RBC Capital Markets.

Brian Abrahams: Hey, good morning guys, thanks so much for taking my order.

Brian Abrahams: question and congratulations on all the developments. So we recently saw some competitor data at a medical conference, and I guess I'm curious, as you've seen things evolve here, what are the most important learnings that you've been taking away from

Speaker 5: Hey, good morning guys. Thanks so much for taking my question and congrats on all the developments. So we recently saw some competitor data at a medical conference and I'm, I guess I'm curious as you've seen things evolve here, what are the most important learnings that you've been taking away on the overall beta amyloid class efficacy and safety profile.

Brian Abrahams: been taking away on the overall beta amyloid class efficacy and safety profiles. And can you maybe expand a little bit more on your latest views on how you expect the competitive dynamics to play out in the space and the impact on your overall launch strategy? Thanks.

Geoff Meacham: Thanks for the question, Brian. You know, this is going to be super interesting from a commercial point of view, because there are an awful lot of different factors at play here. You know, as I said, the markets are sort of thinking there are two A-Beta antibodies here and they remove plaque, and that's it. And the story is actually a whole lot more complex.

Speaker 3: from a commercial point of view. Because there are an awful lot of different factors at play here. You know, I think, as I said, the markets are sort of thinking, is too...

Speaker 3: A-beta antibodies here and they remove plaque and that's it. And the story is actually a whole lot more complex. You know, first I would say these are two products that really go after the problem in a different way. And I think one of the most interesting things that's going to come out of this are the soluble protofibrils. These are the most

Geoff Meacham: You know, first of all, I would say these are two products that really go after the problem in different ways. And I think one of the most interesting things that's going to come out of this are the soluble protofibrils. These are the most neurotoxic forms of A-Beta, and lachanamab goes after those, whereas dynanamab doesn't. And these are the soluble forms.

Speaker 3: neurotoxic forms of A-beta. And lecanomab goes after those, whereas dinanomab doesn't. And these are the soluble forms. And I think that will actually play a factor in our view, which is that this is going to be more of a chronic disease, that you can remove the plaque, but these soluble forms...

Geoff Meacham: And I think that will actually play a factor in our view, which is that this is going to be more of a chronic disease where you can remove the plaque. But these soluble forms, judged by what we're seeing in some of the biomarkers, could actually still continue to play a role, which is why, you know, our belief is that we will need maintenance therapy over time. But there's also, you know, a difference in how these patients were studied. First, much different patient populations. Lecanamab was studied actually in an earlier patient population.

Speaker 3: and this is judged by what we're seeing in some of the biomarkers, could actually still continue to play a role, which is why, you know, our belief is that we will need maintenance therapy over time. But there's also, you know, a difference in how these patients were studied. First, much different patient populations. Lecanumab was studied actually in an earlier patient population.

Geoff Meacham: Roughly two-thirds were in MCI, and one-third in mild, and the nanomab was the reverse. And this is important because there are different rates of progression among these patients. And so actually, and when Priya talked about these low tau, which, you know, have no overlap with the low-tow, low-to-medium-tow that the nanomab studied, These are patients that would really progress quite slowly. So they actually see an effect like that, I think, really speaks to the efficacy of this product. Then there are also all the different endpoints. You know, Lilly measured their primary endpoint on a Lilly designed endpoint. Lecanamab views the gold standard, which is the CDR, sum of boxes.

Speaker 3: roughly two-thirds were in MCI and one-third in mild, and the nanobab was the reverse. And this is important because there's different rates of progression amongst these patients. And so actually, and when Priya talked about these low tau, which, you know, have

Speaker 3: endpoints. You know, Lilly measured their primary endpoint on a Lilly designed endpoint. Lecanumab used the gold standard, which is the CDR sum of boxes. But you know, when you start looking at activities of daily life, you start to see differences and there are some other markers where we think we can demonstrate where efficacy is.

Geoff Meacham: But, you know, when you start looking at activities of daily life, you start to see differences, and there are some other markers where we think we can demonstrate where efficacy is going to be. And then, of course, safety will be a big issue. You know, remember, most neurologists, if they've seen an area before, it's been pretty rare. I mean, we do know that area can occur even in the placebo group, but it's not something they'll have seen very often.

Geoff Meacham: And so this is going to be a different thing for them first to think about monitoring for safety with the MRIs. But, you know, It's one thing to be at a conference and look at safety from a data point of view. It's another thing, I think, to actually be looking at MRIs and seeing RIA. And I think the safety benefit of Canomab will be quite important to physicians as we go forward.

Speaker 3: It's going to be a different thing for them first to think about monitoring for safety with the MRIs. But you know, it's one thing to be at a conference and look at safety from a data point of view. It's another thing I think to actually be looking at MRIs and seeing the RION. And I think the safety benefit of the Cannum Mep will be quite important to physicians as we go forward.

Geoff Meacham: So there are a number of dimensions here that I think will be developed over time. There's going to be all the different blood diagnostics that come along. You know, personally, my belief is that we're going to be seeing treatment progressively over the years in earlier patients before too much neuronal death has occurred.

Speaker 3: So there are a number of dimensions here that I think will be developed over time. There's going to be all the different blood diagnostics that come along. You know, personally, my belief is that we're going to be seeing treatment progressively over the years in earlier patients before too much neuronal death has occurred. And of course, that's where...

Geoff Meacham: And of course, that's where LeKhambi's benefit will arise where they have already studied much more of these patients. You know, generally, I would say, you know, Lily has been focused on looking at subpopulations and trying to say, okay, in this subpopulation, we've got this result and that subpopulation. But, you know, when physicians are dealing with patients in their practice, they don't want to deal with these subpopulations. They want to have a medicine that actually has broad coverage.

Speaker 3: LeCinB's benefit will arise where they have already studied much more of these patients. Generally, I would say, Lilly has been focused on looking at subpopulations and trying to say, okay, this subpopulation got this resolved and that subpopulation. But when physicians are dealing with patients in their practice, they don't want to deal with these subpopulations. They want to have a medicine that actually has broad coverage.

Geoff Meacham: And I think that's where Lekembi will also demonstrate its benefits, so it's going to be quite interesting. There's lots of data here to pour over that's come out of the AIC, and a lot of that will just become much more tangible over the coming months and years.

Speaker 3: And I think that's where the KEMB will also demonstrate its benefit. So it's going to be quite interesting. There's lots of data here to pour over that's come out of the AIC and a lot of that will just become much more tangible over the coming of months and years.

Speaker 3: And I think that's where Lecambi will also demonstrate its benefit. So it's going to be quite interesting. There's lots of data here to pour over that's come out of the AIC and a lot of that will just become much more tangible over the coming months and years. Can we poll for our next question, please?

Operator: Yes, our next question comes from the line of Mark Goodman with Lee Rink.

Marc Harold Goodman: Yes, good morning. Mike, just to make sure we're all aligned here with the numbers and the cost savings. So OPEX, 4.5 billion for 2023, so we should be thinking 3.8 in 2025, and then how do we get there with respect to SG&A and R&D? Are they about even?

Speaker 1: Yes, our next question comes from the line of Mark Goodman with Lee Rink Partners.

Speaker 3: Yes, good morning Mike, just to make sure we're all aligned here with the, with the numbers and the cost savings. So, 4.5Billion for 2023. So we should be thinking 3.8 in 2025 and then. How do we get there with respect to and R and D? Is this are they about even? I mean, is that is already going to.

Michael R. McDonnell: I mean, is R&D going to move below the $2 billion line? Just help us give us a sense of that. And maybe, just as you talk about the P&L, just comment on whether you expect Rose Mark to be higher or lower, you know, in kind of those years, just to help us think about how the P&L is going to look. Yeah, Mark, thanks for the question.

Speaker 3: move below the 2 billion line, just help us give us a sense of that and maybe just as you talk about the P&L, just comment on do you expect gross margins to be higher or lower in those years just to help us think about how the P&L is going to look. Thanks.

Michael R. McDonnell: So your math is correct. Our goal would be to achieve a full run rate of 700 million net savings in 2025, so on an OPEC space of 4.5, that would take it to the neighborhood of about 3.8 billion. The savings will be both in SG&A and R&D. We've already done quite a bit in R&D, as we talked about, that will yield a lot of savings with our prioritization program, but we'll also be looking at ways of conducting our clinical trials, our existing. trials more efficiently.

Speaker 2: Yeah, Mark, thanks for the question. So your math is correct. Our goal would be to achieve a full run rate of the 700 million net savings in 2025. So on an up-ex base of four and a half, that would take it to the neighborhood of about 3.8 billion. The savings will be both in S, G and A and R and D. We've already done quite a bit in R and D as we talked about that we yield a lot of savings with our...

Michael R. McDonnell: So the overall savings will be a mix. You know, we're not providing full granularity on whether R&D will be plus or minus the $2 billion number that you threw out. But, you know, I would estimate that the savings from here would probably be a little more weighted to the SG&A line and a little less to R&D. But ultimately, you know, the savings will come from both sides. The gross margin. That's a trend that we expect will continue at least for the near term.

Speaker 2: I would estimate that the savings from here would be probably a little more weighted to the SG&A line and a little less to R&D, but ultimately, you know, the savings will come from from both sides. The gross margin, that's a trend that we expect will continue at least for the near term, and when you look at the product mix, we obviously have a lot of

Michael R. McDonnell: And when you look at the product mix, we obviously have, you know, the continuing declines in some of the MS products, which are on the higher margin side. And then you have contract manufacturing that's really growing quite a bit year on year. So we do expect to see our cost of sales as a percentage of revenue, at least for the near term, to be a bit..., a bit lower than what we've heard, or I should say the cost of sales percentage would be higher, the gross margin would be lower than what we've seen in the past. And then over time, as LeCambi becomes profitable and ramps up, we should hopefully see some recovery on the gross margin.

Speaker 2: You know, the continuing declines in some of the MS products, which are on the higher margin side, and then you have contract manufacturing that's really growing quite a bit year on year. So we do expect to see our cost of sales as a percentage of revenue, at least for the near term, to be a bit

Speaker 2: a bit lower than what we've heard, or I should say the cost of sales percentage would be higher, the gross margin would be lower than what we've seen in the past. And then over time as what can be becomes profitable and ramps up, we should hopefully see some recovery up on the gross margin line.

Michael R. McDonnell: Thanks, Mike. Can we go to our next question, please? Yes, our next question comes from the line of Robin Carnalskis with, "Hi, thanks for taking my question."

Speaker 6: Thanks Mike. Can we go to our next question please? Yes, our next question comes from the line of Robin Karnalskas with Truis. Hi, thanks for taking my question. I guess I would just be curious initially as you're talking to doctors about if there's a difference between the academic community and the community setting and interesting using drugs, and coordinating that, can you give us more details as to how laborious and how easy?

Operator: Yes, our next question comes from the line of Robin Carnalskis with Truis.

Speaker 3: The CMS registry now that it's up and running is and what questions they're asking. Thanks. I think first on the registry, all the feedback is this is manageable. I think everybody would prefer not to have a registry, but.

Robyn Karnauskas: I think first on the registry, all the feedback is that this is manageable. I think everybody would prefer not to have a registry, but, you know, personally, I've been on it, there's drop-down menus.

Geoff Meacham: Most of the data are available from the medical record, so we think that that part should be okay. You know, there's some bumpiness around the PET scan reimbursement that should be clarified in the next 90 days. But, you know, I think where we are now, the one PET scan that is included should not be a barrier.

Speaker 3: You know, personally, but not at their drop down menus. Most of the data are available from the medical record. So we think that that part should be okay. You know, there's some bumpiness around the PET scan reimbursement that should be clarified in the next 90 days. But, you know, I think where we are now, the one PET scan that is included should not be...

Geoff Meacham: I think there's just, you know, the mechanics of actually seeing patients that will change. You know, there's going to be a need to do more of the cognitive testing, get the PET scan or the lumbar puncture, figure out where to go with the MRI infusion centers, and then get the three MRIs. You know, there will be a routine that will develop in offices, but to start with, nobody's really doing that right now.

Speaker 3: another lumbar puncture, freaking out where to go with the MRI, infusion centers, and then getting the MRIs.

Speaker 3: You know, there will be a routine that will develop in offices, but to start with, nobody's doing that right now, really. I mean, we obviously have some centers that have been able to start infusing the Kenvi during the before-fold traditional approval. But, you know, if we look at the masses.

Geoff Meacham: I mean, obviously, we have some centers that have been able to start infusing the KAMG before traditional approval. But, you know, if we look at the masses, everybody's having to gear up for this. I think one of the other things that I would say is, you know, there's been so much disappointment in this field over the years. A lot of hope, but a lot of these medicines didn't work out. And so I think there's been an awful lot of wait and see amongst some of the medical community. Are we really going to get full approval? Are we really going to get CMS approval?

Speaker 3: everybody's having to gear up for this. I think one of the other things that I would say, you know, there's been so much disappointment in this field over the years. A lot of hope, but a lot of these medicines didn't play out. And so I think there's been a lot of weight and sea amongst the some of the medical community. Are we really gonna get full approval? Are we really gonna get CMS approval? So I think now that is in place,

Geoff Meacham: So I think now that that is in place, which is, you know, as I said before, a really seminal moment for healthcare, we'll see the practicality for this, and we've always said that this is going to be a relatively measured uptake on revenue. I will say that the whole field organization is geared up for this. This is a much more complex field organization than what you would have with a typical launch, with the care navigators, with MSLs, with field reps, with regional thought leaders, and professionals.

Speaker 3: Much more complex field organization than what you would have with a typical launch with the care navigators with MSLs, with field reps with regional pot leader.

Geoff Meacham: So there are going to be a lot of people actually holding hands with patients, with physician practices, trying to help make sure that this is as seamless as possible. But it is not clearly as simple as just prescribing a pill and going down to your local pharmacy.

Speaker 3: professionals. So there are going to be a lot of people actually holding hands with patients, with physician practices, trying to help make sure that this is as seamless as possible. But it is not clearly as simple as just prescribing a pill and going down to your local pharmacy.

Operator: Your next question comes from the line of Mohit Bonsville with Wells Fargo.

Speaker 1: Thanks, Chris. Next question, please, operator. Your next question, customer one of Mohit Bonsel with Wells Fargo.

Mohit Bansal: Great, thank you very much for taking my question. And maybe a question for Priya. So when you think about subcutaneous Lecambi, and we'll see the data later this year, but how do you think about positioning it? Is it, do you think it is more of a maintenance treatment after the IV Lecambi versus an induction kind of treatment, and how important is CMAX to get an induction approval?

Speaker 7: Great. Thank you very much for taking my question. And maybe a question for Priya. So when you think about subcutaneous Lecambi, and you'll see the data later this year, but how do you think about positioning it? Is it – do you think it is more of a maintenance treatment after the IV?

Priya Singhal: here. Super helpful. Thank you. Thank you.

Speaker 7: LICAB versus an induction kind of treatment? And how important is CMAC to get an induction approval here? Super helpful, thank you. Thank you, Mohit. So it's a great question. I think maybe before I answer that, I'll just say that.

Priya Singhal: Thank you, Mohit. So it's a great question. I think maybe before I answer that, I'll just say that Iirgin and ESA are really looking to simplify and improve the patient journey, and this is a multi-pronged effort. One is a subcutaneous formulation, which, you know, can address the infusion capacity and other issues that are potential for an auto-injector and self-administration at all. And then the second is, you know, really thinking about how L'Akembi can be positioned to really address the long-term duration question that is still out there.

Speaker 4: Biogen and E-ci are really looking to simplify and improve the patient journey. And this is a multi-pronged effort. One is subcutaneous formulation, which, you know, can address the infusion capacity and other issues, potential for an auto injector and self-administration at all. And then the second is, you know, really thinking about...

Speaker 4: how Lecambi can be positioned to really address the long-term duration question that is still out there. The good news here is that Lecambi does have the opportunity to be treated, to be used, you know, with a long duration. And the question is, what is the right maintenance duration for this therapy?

Priya Singhal: The good news here is that Lecombe does have the opportunity to be treated, to be used, you know, for a long duration, and the question is, what is the right maintenance duration for this therapy. And with regard to subcutaneous, the data that we just presented at AAC were modeling data to show that. that really, the subcutaneous formulation would be about 720 milligrams administered weekly instead of the intravenous biweekly therapy. Now, the important thing here to understand is that really, the hope and the data kind of point to the fact that safety could actually be better with the subcutaneous formulation.

Speaker 4: And with regards to subcutaneous, the data that we just presented at AAIC was modeling data to show that really the subcutaneous formulation would be about 720 milligrams administered weekly instead of the intravenous biweekly therapy. Now, the important thing here to understand is that really it is the hope and the data that we are trying to get at the end of the day,

Priya Singhal: So, you know, we might have lower rates of area, and the filing is expected to be complete by Q12024. I also expect that more data, ESI has communicated this, will be released at CTAD this year. So I think, you know, let's wait for more of that data, which is, I think, forthcoming, and we look forward to, you know, hopefully simplifying the patient.

Speaker 4: So let's wait for more of that data, which is, I think, forthcoming, and we look forward to hopefully simplifying the patient journey.

Operator: Welcome next to Umar Raffat with Evercore.

Umer Raffat: Hi guys, thanks for taking my question. I feel like there's an elephant in the room, and I do think we should speak to it. And, Chris, this one is for you specifically.

Speaker 1: Next, Priem. Next question, please. Look next to Umar Rafat with Evercore.

Speaker 5: Hi guys, thanks for taking my question. I feel like there's an elephant in the room, and I do think we should speak to it. And Chris, this one is for you specifically. And the question really is, investors are very curious, what was your thought process on two specific occasions in the last few weeks? First, when you were first told about the proposed changes to the board, what was your thought process? And second, what was your thought process in deciding whether or not you needed to put out any disclosures?

Umer Raffat: And the question really is, investors are very curious; what was your thought process on two specific occasions in the last few weeks? First, when you were first told about the proposed changes to the board, what was your thought process? And second, what was your thought process in deciding whether or not you needed to put out any disclosure?

Geoff Meacham: Well, you know, I think if we just step back, I mean, there's, you know, clearly a lot of people got focused on some of the gossip here, but I think more fundamentally, there's been a significant change with our board. And anybody who knows anything about boards knows that you only make a significant change on a board through a consensus of the board. A board is a college of peers with equal power.

Speaker 3: Well, you know, I think if we just step back, I mean, there's clearly a lot of people got focused on some of the gossip here, but I think more fundamentally, there's been a significant change with our board. And anybody who knows anything about boards.

Speaker 3: is that you only make significant change that abords through a consensus out the board. Now board is a college of peers with equal power. And you know, there have been a lot of significant investor outreach. The company is doing an awful lot of change internally at a management level, addressing a lot of the...

Geoff Meacham: And, you know, there has been a lot of significant investor outreach. The company is doing an awful lot of change internally at a management level, addressing a lot of the concerns that investors, I think, have been raising for quite a number of years and certainly concerns that I have heard. And the board actually said, well, we need to think about governance and whether we are changing as well. And I can tell you that all of the discussions to which I was a party concerned one thing, and that was what is right for biogen.

Speaker 3: The concerns that investors, I think, have been raising for quite a number of years and certainly concerns that I have heard. And the board actually said, well, we need to think about governance and are we changing as well? And I can tell you that all of the discussion to which I was a party.

Geoff Meacham: And I found that very encouraging. But, you know, we have a new chair, and I have to say I couldn't be happier working with Carolyn. She's someone of unimpeachable integrity, extremely smart, analytical, but really has a real passion for the mission of the company. And I think the board is clearly four-square behind all of the changes that we're making. I think all of that is good. In terms of disclosure, you know, we look at people.

Speaker 3: All concerned one thing and that is what is right for Biogen and I found that very encouraging. But you know we have a new chair and I have to say I couldn't be happier working with Carolyn. She's someone of unimpeachable integrity, extremely smart, analytical, but really has a.

Speaker 3: a real passion for the mission of the company and I think the board is clearly four square behind all of the changes that we're making. So I think all of that is good in terms of disclosure. You know, we look at people, we don't look at their personal relationships and I would just say that Glass Lewis and ISS recommended Susan Langer.

Geoff Meacham: We don't look at their personal relationships. And I would just say that Glass Lewis and ISS recommended Susan Langer, and investors voted her onto the board, and I don't think there's really anything more to be said about that. Thank you, Chris. Can we move to our next question, please? We have a question from Salveen Richter with Goldman Sachs.

Speaker 6: and investors voted around the board. And I don't think there's really any thing hard to be said about that. Thank you, Chris. Can we move to our next question, please? Yes, sir, we have a question from Salveen. Richter with Goldman Sachs. Thank you, good morning. How is the fit for growth in your cost alignment work influenced your thoughts on M&A and

Operator: Yes, sir. We have a question from Salveen Richter with Goldman Sachs. Thank you, good morning.

Salveen Jaswal Richter: Fit for Growth, remember, is really reflecting the transition of the company. We have been very focused on multiple sclerosis for 45 years.

Geoff Meacham: We have had some very prosperous times in the more recent history of the company. And as we have seen a reversal of fortunes in some of those products, I don't think we as a company have really made the changes in our organizational structure and our cost base to really reflect that transition. You know, one of the things I like to tell our management teams is that the hardest word in management is

Speaker 3: the transition of the company. We have been very focused on multiple sclerosis over 45 years. We had some very prosperous times in the more recent history of the company. And as we have seen a reversal of fortunes in some of those products, I don't think we as a company have really made the changes in our organizational structure and our cost-based to really reflect that transition.

Geoff Meacham: You know, you have to think about the short term and the long term, but one of the things is that you have to be cost efficient, and you have to invest for growth. And that's been a very tricky exercise.

Geoff Meacham: If we didn't have all the product launches, you know, just cost reduction would be fairly easy. What we've had to do is be a lot more thoughtful about what the best way to position biogen going forward is. And that's why we didn't start with where we were, but we started with where we want to be. What is that organization?

Speaker 3: You know, just cost reduction would be fairly easy. What we've had to do is be a lot more thoughtful about what is the best way to position by age and going forward? And that's why we didn't start with where we were, but we started with where we wanna be. What is that organization? How many people, we benchmarked the organization. We've looked at the making sure we have enough investment and the product launches.

Geoff Meacham: How many people? We've benchmarked the organization, we've looked at making sure we have enough investment in product launches, have enough investment in those exciting R&D projects that we really want to focus on, and then work backwards from there. So I think the company is well positioned now to be oriented towards growth, while also managing our historic portfolio. And again, I come back and say we are still the market leaders in MS, and we have an obligation to both physicians and their patients to prove it.

Speaker 3: have enough investment in those exciting R&D projects that we didn't want to focus on, and then work backwards from there. So I think the company is well positioned now to be oriented towards growth while also managing our historic portfolio. And again, I come back and saying we are still the market leaders in MS and we have an obligation to both physicians and their patients.

Geoff Meacham: And so we will be changing the way we, the promotional mix; we're not going to just walk away from that either. And I think, in terms of MNA and external growth, really, you know, what do we do to build on that? And that starts with BD and an earlier stage of the pipeline.

Geoff Meacham: Are the things that we want to build on that? And in particular, as I've said in the past, I think we're proud of our position in neuroscience, but neurological conditions are slow-progressing diseases and really require very expensive, long trials. And there are ones where you can't really de-risk them with a phase-2 asset.

Speaker 3: to the pipeline of things that we want to build onto that. And in particular, as I said in the past, I think we're proud of our position in neuroscience, but neurological conditions are slow progressing diseases and really require very expensive long trials. And... It's already a pressin and through, it becomes a business work, which I believe week after week, is now trying to find ways to implement our microbut wrapping the??ache or navigate whichever area changed.

Geoff Meacham: So we're not going to walk away by any means, but we do need to get into portfolio decisions where we can actually get a better read on efficacy and safety in phase two. And I think we can do that with the rare diseases, with, you know, more of a focus on immunology. You know, we've never been very far from immunology in the history of the company.

Speaker 3: There are ones where you can't really de-risk them with a Phase II asset. So we're not going to walk away by any means, but we do need to get into portfolio decisions where we can actually get a better read on efficacy and safety in Phase II. And I think we can do that with the rare diseases, with more of a focus on immunology. If you don't, we...

Geoff Meacham: And, of course, we are already into our psychiatry, and can we build that portfolio? But I think, you know, we have now a much more nimble structure, a more empowered organization. You know, one of the things that comes out of our culture surveys is that we can take quite a long time to make a decision.

Speaker 3: everything is far from immunology and the history of the company. And of course, with, we already are in New York's psychiatry, and can we build that portfolio? But I think, you know, we have now a much more nimble structure, a more empowered organization, an organization, you know, one of the things that comes out of our culture surveys is that we can take quite a long time to make a decision. So in all of those things, when you're dealing with partners, you're dealing with business development. you

Geoff Meacham: So in all of those things, when you're dealing with partners and you're dealing with business development, you want to have that business that ability to be agile, and so I think fit for growth will actually facilitate that, but really, the approach to external growth is more strategic and how we shape the portfolio of companies and limits to size or use of equity as part of the question, Chris. You know, I think we're really looking at what really makes sense for the company.

Geoff Meacham: You know, I don't think we've seen anything that would require the use of equity. And, you know, Mike, we've got, I think, about, what, 7.3 billion in cash. So, as far as I'm concerned, we don't.

Speaker 3: I think we're really looking at what really makes sense for the company. I don't think we've seen anything that would require use of equity. And you know, Mike, we've got, I think, about about 7.3 billion in cash. So, you know, as far as I'm concerned, we don't...

Geoff Meacham: Everything that we think we can manage with what we've got. The most important thing is to really, one of the major things we try to do with Fit for Growth is really get a lot more rigorous about how we allocate capital. You know, we've had this very good fortune over the last few years, and when there's a lot of money in the company, we don't have the same rigor about how we allocate capital.

Speaker 3: Everything that we think, we can manage with what we've got. The most important thing is to really, you know, one of the major things we tried to do with fit for growth is really get a lot more rigorous about how we allocate capital. You know, we've had this very good fortune over the last few years and when there's a lot of money in the company,

Geoff Meacham: That is a real focus for us. We really want to make sure that we're putting our investments in the things that make the best returns for the company and our shareholders. And so that part is a cultural shift that's coming out of that, and I think that will affect how we think about business development as well.

Speaker 3: don't have the same rigor about how you allocate capital. That is a real focus for us. We really want to make sure that we're putting our investments in the things that make the best returns for the company and our shareholders. And so that part is a cultural shift that's coming out of that. And I think that'll affect how we think about business development as well. Right, next question, please.

Operator: We'll go next to Michael Yee with Jeffreys.

Michael J. Yee: Hey, guys, thank you. Just wanted to ask about the Zeran alone program, obviously, Bedoufidae coming up, but Chris, you've made some pretty bullish comments about this before, and maybe you can give some expectations about how to think about that opportunity, and whether there could be a split label, and importantly, since you're talking about cost-cutting, how a positive approval or maybe some form of two different indications could So just talk a little bit about Shirana.

Speaker 8: Hey guys, thank you. Just wanted to ask on the Xilana Loan program, obviously, of the due for date coming up, but Chris, you've made some pretty bullish comments on this before. It may be right size or expectations about how to think about that opportunity and whether there could be a split label and importantly, since you're talking about cost cutting, how...

Geoff Meacham: Yeah, well, we, you know, we have a pedufa dates on August 5th, so, you know, we'll be able to.

Geoff Meacham: on August 5th, so, you know, we'll be able to give you a full update once we've had the FDA decision. So, you know, and I don't really want to talk about that process right now.

Geoff Meacham: You know, I'll just say, there is an enormous unmet need in people's health, and that only seems to be rising. You can't look at the news without reading about reports of the rise of mental health conditions. I think that partly got exacerbated by the... you know, the pandemic. And, you know, one of the things that the pandemic did was, I think, really bring this more out into the open where it belongs.

Speaker 3: So, I don't really want to talk about that process right now. You know, I'll just say, you know, there is an enormous unmet need in the health. And that only seems to be rising. You can't look at the news without reading about reports of the rise of mental health conditions. I think that partly got exacerbated by the pandemic.

Speaker 3: And one of the things that is that the pandemic did was I think really bring this more out into the open where it belongs. Certainly, PPD is a huge on that need, not a taboo around that. And that will be quite a heavy lift actually, because it's not really...

Geoff Meacham: Certainly, PPD is a huge unmet need, and there is a massive taboo around that. And, you know, that will be quite a heavy lift, actually, because there isn't really any clarity around who really is responsible for diagnosing and treating, you know, mothers at that point. And so, you know, we look forward to being able to hopefully contribute to that, but there is a significant and urgent need also in the way it's treated.

Speaker 3: there isn't really a clarity around who really is responsible for diagnosing and treating.

Speaker 3: you know, mothers at that point. And so, you know, we look forward to being able to hopefully contribute to that, but there is a significant need also in the way it's treated. You know, I think something that could act much faster than current treatments, something that's perhaps episodic.

Geoff Meacham: You know, I think something that acts much faster than current treatments, something that's perhaps episodic, could be of great value to patients. So I do think there is an opportunity, but again, we need to wait for the FDA decision, and we'll fully update everybody at that point.

Operator: Yes, our next question comes from Tim Anderson with Wolf Research.

Timothy Minton Anderson: Thank you. I know that

Speaker 1: Yes, our next question comes from Tim Anderson with Wolf Research.

Timothy Minton Anderson: Biogenity Eastside will continue to talk about

Timothy Minton Anderson: the need to dose Alzheimer's drugs or Lecombe, specifically, chronically,

Speaker 3: I know that Biogen and E-cyte continue to talk up the need to dose Alzheimer's drugs, or Lekembi specifically, chronically, and not just for a finite period. You're talking about protofibrils and how they're the most neurotoxic species and that sort of thing. From what I understand, the science is really thin that says you need to dose chronically, and that soluble forms of A-beta really make sense.

Timothy Minton Anderson: and not just for a finite period, and you're talking about protofybrils and how they're the most neurospyroids,

Timothy Minton Anderson: and how they're the most neurotoxic species and that sort of thing. From what I understand, the science is really thin that says you need to dose chronically and that soluble forms of A-Beta really make a difference in terms of continued disease progression. And empirically, if we just look at what came out of AIC, we see a similar level of reduction and improvement in cognition with finite dosing of Dananamab, and we see continued curve separation between Lilly's product and your product.

Timothy Minton Anderson: So doesn't that potentially call into question the need for chronic dosing? And isn't that possibly a risk with Lekembe that docks actually only use it until plaque is cleared, and then they stop, which would lead to a very different revenue opportunity for LeCB?

Priya Singhal: Dr. Single, thank you for the question.

Priya Singhal: Thank you for the question. Yes, so this is a very important area of inquiry and scientific hypothesis. So maybe before I really talk about Lekembe or Dananamab, we can agree that Alzheimer's disease is really a progressive and eventually fatal condition with, you know, obviously neurodegeneration involved along the way. And what we've seen with Lekembe and actually multiple lines of evidence outside of Lecombe, also with adikanyamab in the past, is that when you clear plaque, it does not reaccumulate that easily, but what you do see is progression of disease, and you see an impact on the fluid biomarker.

Priya Singhal: So with Lekembe and with the gap period that we had in phase two, we saw an increasing, you know, a reversal of the A-Beta 42 to 40 ratio, implying that the disease continued to progress. We saw very similar evidence with adichanumab. And I think what we see now with the plasma petal levels, in the past, we saw with adikanyamab sort of decreasing with the emerged data set, and with Lekembe, what we've seen with Ptau 181 is a stabilization.

Priya Singhal: And actually, if you saw the nanomab data on P217, which was the plasma tau biomarker they use, and this tracks really quite closely, you see a slight increase. So I think we still need to understand with more data transparency, the Donanamab data, of what really happens to patients who stopped at six months or stopped at one year. And we hope we'll see more of that data from their open-label extension and, you know, be able to draw conclusions.

Priya Singhal: But when you look at the substrate for the nanomab, it really does not make sense to continue to dose. One, because of substrate exhaustion, and two, because of the present. of anti-drug antibodies close to about 84 to 87%. Whereas with Lekembe, you have the opportunity to have an individualized treatment duration discussion between the patient and the doctor because actually it continues to impact the soluble substrate, as Chris mentioned, and we are going to be generating data to actually look at this in a very systematic way with the phase two open-label extension. So I think that the jury is out, but the multiple lines of evidence do not seem to indicate that you can stop and reverse Alzheimer's disease.

Priya Singhal: So that's where I'll leave it. Thank you.

Operator: Yes, sir, we'll go next to Evan Sigerman with Bima. Hi, guys. Thank you so much. Thank you so much.

Evan Seigerman: Hi guys, thank you so much. Thank you so much for taking the time to answer my question. So now that you've talked through some of the right size that you plan on doing, and now you're focusing on BD in the back half of the year, can you talk about how you think about the value that still exists for BD in the market today? And are you focused on really near-term revenue opportunities to grow the business or earlier stage development items? Thank you.

Geoff Meacham: Well, you know, it's quite interesting. You say today when I talk to bankers, it's interesting. I think if you've got something that has really good data, there tends to be a price for that, and that price is more or less constant. You know, I was asking bankers, do you think Merck would have had to pay even more for Prometheus, for instance, two years ago in, you know, the kind of go-go days of biotech? And their view was no.

Geoff Meacham: And so I think if you find quality assets out there, that really doesn't vary that much. What does vary is all the other stuff, right? You got a little bit more interest in more speculative things, and that's what really sort of says, well, are things relatively expensive or not? And as a company, I think, You know, I always like to say our investors can make them rich, and not someone else's shareholders.

Geoff Meacham: So if you're going to do a deal, you have to make sure that there is value creation for biogen and its shareholders. And that's a hard thing. And we all know that a lot of BD doesn't do that.

Geoff Meacham: You know, the way I look at biogen, we've got, we've had the decision on Kambi. We have a pending decision at the FDA. For Zaranalan alone, we've got pending decisions, or Lecombe around the world. If you look at biogen over the next two, three years, there's an opportunity for a return to growth over that time frame. I think we are making some bold moves here to address our cost base and really reposition our resources in the company.

Geoff Meacham: And, you know, we have, I think, some super interesting products in our research and development pipeline that Priya mentioned. So if you look at it, you know, we already have a value creation story. So anything that we're going to do has to be complementary to that picture. And you do have to go look, and you're going to have to look at 100 things before you find something that really works. And that's what our teams are doing. The worst thing you can do is fall in love with something, because then you lose your objectivity.

Geoff Meacham: I can tell you that we are laser-focused on change, changing the trajectory of our share price. As I've heard from so many investors, our share price hasn't really moved in 10 years. So that's where we're focused on really driving, being much more focused on shareholder value, and that means allocating capital in a way that's commensurate with that. Thanks for that.

Operator: The next question comes from Amy Fadia with Needham.

Ami Fadia: My question, maybe a bit of a follow up on the last topic. It sounds like, you know, in the context of the Fit for Growth initiative, does that mean that from a business development perspective, you're unlikely to do a deal that's significant that's a significant lift from an R&D perspective over the next couple of years? And also, if you could provide some color on how you anticipate gross margin to evolve between 2023 and 2025, that would be helpful. Thank you.

Geoff Meacham: I missed part of that sentence, Bob. Does that mean on the BD that we would not do something? I couldn't, I didn't. Could you repeat the question? Sure.

Ami Fadia: Sure, does that mean that you would not do a deal? Yes, that you would not do a deal that is a significant heavy lift from a R&D perspective over the next couple of years.

Geoff Meacham: Well, I think we have a long enough list, to be honest. So I'm certainly looking at things that... You know, I think. To me, it's less around the expenditure as much as how much risk you're taking. What I, you know, what I find hard is when we have a multi-year, five-year type phase three study that's essentially a proof of concept. That's, I think, what we're really trying to move away from. Now, what I would say, though, is:

Geoff Meacham: You know, we are clearly benchmarking, and I, you know, I really want us to be rigorous on GNA.A. I want us to be competitive in sales and marketing. On R&D, I want us to be super disciplined on capital. But I would say, you know, all the benchmarking we've done is that Biogen has actually been better than average on productivity.

Geoff Meacham: I do believe greatly in a lot of the capability within Biogen. And so I do think if there are things that really make sense, I actually have a higher degree of trust in our R&D organization, and I think that we should continue to invest in R&D. The really important thing is that you really, you know, the secret about R&D is you have to design a killer experiment, define what the criteria are for moving into the next stage, and don't allocate capital unless you really meet those data.

Higher degree of trust in our R&D organization that I think that we should continue to invest in R&D.

They really.

<unk> thing is that you really think secret about R&D is you have to design a killer experiment.

Define what the criteria for moving into the next stage and don't allocate capital unless you really meet those those data the problem in a lot of organizations as we fall in love with something.

Geoff Meacham: The problem in a lot of organizations is that we fall in love with something. The data aren't quite clear, but, you know, we'll go on and keep going because we have it. And I think the discipline to kill stuff that doesn't meet its milestones is probably more important than anything else to managing R&T investors. And that's where I'm grateful to have Priya because I think Priya is extremely objective about this. We all are.

The data arent quite clear, but we'll go and keep going because because we have it.

The discipline to kill stuff that doesn't meet its milestones as something that is probably more important than anything else to managing R&D investments.

That's why I'm grateful to have pre up because I think pre is extremely objective on this.

Michael R. McDonnell: But, again, I do think that we are an innovative company, and I wouldn't want to restrict too much Biogen's ability to invest in R&D over time. But, you know, we're going to be extremely tough on what it is that we choose to develop. Then maybe on the gross margin line in terms of how we expect that to evolve. You know, we said in our prepared remarks that we do expect to see our cost of sales as a percentage of revenue to continue to increase throughout the rest of 2023.

All are.

But again I do think that we are an innovative company and I wouldn't want to restrict too much.

Biogen's ability to still invest in R&D over time, but we're going to be extremely tough on what it is that we're going to choose to develop.

And then maybe on the gross margin line in terms of how we expect that to evolve.

We said in our prepared remarks that we do expect to see our cost of sales as a percentage of revenue to continue to increase throughout the rest of 2023, and that's pretty heavily tied to the.

Michael R. McDonnell: And that's pretty heavily tied to the outsized contract manufacturing revenue that we're seeing this year. And, you know, without guiding beyond 2023, I can just say trend-wise, when you look at some of our bigger ticket items, you know, we've got the answer. ICT20s, which are highly profitable, are kind of flat to, you know, somewhat declining has kind of been the trend there.

The outsized contract manufacturing revenue.

We're seeing this year and without guiding beyond 2023, I can just say trend wise when you look at some of our bigger ticket items, we've got the anti CD <unk>, which are highly profitable theyre kind of flat.

Flat to somewhat declining has kind of been the trend there you've got tech Vadera, where you've got generic competition in the U S. Obviously, we do have.

Michael R. McDonnell: You've got, you know, Tech Federa where you've got generic competition in the U.S. Obviously, we do have legal protection through the early part of 2025, but that's a high-margin product, as you know. And so, you know, when you look at the growth trajectory of those products versus contract manufacturing, and we will continue to be aggressive in pursuing contract manufacturing opportunities if we can utilize them to fill space that we otherwise wouldn't use, you would expect that we would continue to see some pressure on the gross margin percentage.

Legal protection through the early part of 2025.

But that said that's a high margin product as you know.

And so when you look at the growth trajectory of those products versus the contract manufacturing and we will continue to be.

Aggressive in pursuing contract manufacturing opportunities, if we can utilize them to.

Fill space that we otherwise wouldn't use.

You would expect that we would continue to see some some pressure on the gross margin percentage.

Michael R. McDonnell: That's something that we will manage. We are seeing. We did have $34 million of idle capacity charges during the quarter. That is something that we hope will be addressed over time as Lekemi ramps up and we're able to fully utilize our facility in Soliturn. So that would potentially be an offset. But, you know, we don't see any real material increases in our gross margin percentage. That's something we're going to have to manage. And that's part of the reason why we put such a keen focus on our operating expenses and introduced such a meaningful cost reduction program. Great, thanks, Mike. Next question, please.

That's something that we'll manage we are seeing we did have $34 million of idle capacity charges during the quarter.

That is something that we hope will abate over time as can be.

Ramps up and we're able to fully utilize our facility in solid turn so that would be potentially an offset but.

We don't see.

Raw material increases in our in our gross margin percentage of that's something we're going to have to manage and that's part of the reason why we put such a keen focus on our operating expenses and introduce such a meaningful cost reduction program.

Thanks, Mike next question please.

Operator: We'll go next to Brian Scornie with the Bears.

Yeah.

We will go next to Brian <unk> with Baird.

Brian Peter Skorney: Hey, good morning, everyone. Thank you for taking my questions. Really, I just had one. You guys had a role in developing both Camby and Aga Helm. And one of the things that seem to be jumping out is sort of the differential profile of these drugs in terms of RIA rates, seeing that those differences despite very similar plaque removal. So I guess, you know, there's a lot of speculation and maybe remains a lot of uncertainty as to the underlying mechanism, but anything you can say in terms of sort of your thought process about how much of this may be sort of subspecies, target driven, and how much of it may just be sort of a matter of PK. I mean, it seems like the comments on sub-2 indicate at least some of it may be CMAX driven. But just how are you guys currently thinking about the mechanism underpinning the Aurea?

Hey, good morning, everyone. Thank you for taking my questions.

One you guys had a role in developing both of them can be.

And one of the things that seems to be jumping out as sort of the differential profile.

Of these drugs in terms of order rates.

Those differences the slight very similar platform level. So I guess, there's a lot of speculation.

Maybe remains a lot of uncertainty as to the underlying mechanism, but any.

Anything you can say in terms of sort of your thought process about how much of this maybe sort of some species target driven and how much of it may just be sort of a matter of PKU I mean, it seems like the comments on Q indicates at least some of it maybe snacks driven but just how are you guys currently thinking about the mechanism underpinning Oreo.

Priya Singhal: Yes, thank you, Brian. Overall, I think we don't fully understand the mechanism of ARIA, but the data have been replicated for Lekembe in terms of a low incidence of Aria, in the sense that when you compare it with some of the other anti-ameloid, anti-Beta-ameloid antibodies, it is significantly lower and has been replicated twice. So for example, in the Clarity AD study, we had an ARIA rate of about 12.6 percent, but with the nanomap, we see an ARIA E rate of 24%, and very similar sorts of proportions with Aria 8.

Yes. Thank you, Brian So overall I think.

We don't fully understand the mechanism of RVO.

Diego.

Has been replicated form that can be in terms of low incidents of body.

In the sense that when you compare it with some of the other anti amyloid.

Andy Beta amyloid antibody that is significantly lower.

Replicated twice. So for example in the <unk> study, we had an event of about 12, 6% with banana map we see.

Easing of 24%.

And any similar sort of proportions with each.

Priya Singhal: So I think that it also depends on the population that has been recruited. And as Chris mentioned, these populations have been slightly different, with MCI being in the early population because we really believe that patients need to be treated earlier. So that could be playing a role. But I think overall, it's very hard to assess exactly what may be driving the differential dates.

I think that it also depends on the population that has been included and as Chris mentioned these populations have been slightly different with NCI being in the early population because we really believe that patients need to be treated earlier, so that could be playing a role, but I think overall, it's very hard to.

Assess exactly what may be driving the differential what.

Priya Singhal: What I think we can say is that the observation, that the incidents, are significantly different, and therefore, I believe that the benefit risk is also different. And that, I think, is what doctors should be looking at. Combining that with the efforts that, you know, we do have a very clear window of susceptibility with Aria and Lekembi that we see, and we know that it's really pretty much circumscribed to the first six months. There's no titration, so, you know, we see the rates that we do, and then it really peters off completely.

What I think we can see is that the observation that the incidence is significantly different and therefore I believe that the benefit risk is also deferred.

And that I think is what doctors should be looking at couple of that with the efforts that we do have a very clear winner.

Susceptibility with audio and Mackenzie that we see we know that it's really paying off.

Circumscribed through the first six months there is no titration so.

The rates that we do and then it really peters off with BP and that guidance is.

Geoff Meacham: And recurrence is very, very low. This helps us because we can, you know, help physicians really get on board, stay on the monitoring plan, and that is really the focus of ESA with their understanding of your program. So I think overall, you know, we have to look at the benefit risk. We've got the broad AD population that did not recruit via TOW substratification for Lakeb. And we have the results right up to Tau PET because everybody, you know, amyloid kind of progresses into neurofibrillary tangles.

Is any of that Eagle. This helps us because we can help physicians get onboard.

On the monitoring plan and that is really the focus.

Hi.

So I think overall, we have to look at the benefit tests.

<unk> population that did not preclude by one sub certification, but they can be.

The results right off the bat because everybody as you know.

Amyloid chronic progressive into the <unk> tangles and so it's really helpful to understand that there is a broad application where they can.

Geoff Meacham: And so it's really helpful to understand that there is a broad application for Lekembe, and then there is a risk profile that is also in the broader population. I think we do have a box warning, as you know, with the APOE4 patients who do have a higher rate of ARIA, and this, again, is really what we see across the different molecules.

Can be and then there's a risk profile. That's also in the broader population.

We do have a box warning as you know.

April four.

<unk>, who do have a higher rate of Eylea. In this again is really what we see across the different molecule.

No one of those things.

Geoff Meacham: One of the other things, Prieta, was so Lynn Kramer and Priya over the weekend after this super interesting paper about all that happened at the AIC and the differences. And the thing that struck me is just really how complex this is and how much there is to really analyze and understand. One of the things that struck me was that there is a difference in safety, not just in the broad population, but we see that in every subgroup, too.

So.

Then kramer and pre.

Over the weekend after this super interesting paper.

I'll, let happen at AIC and the differences and the thing that struck me is just really.

How complex this is and how.

How much there is to really analyze and understand but one of the things that struck me was that there is a difference in safety not just in the broad population, but but we see that in every subgroup to EMEA.

Geoff Meacham: I mean, you're looking at the April E group; heterozygous, homozygous is a difference. And if these drugs were similar, you wouldn't expect such a dramatic difference. I mean, we're talking about, in some subgroups, it can be as much as three to one race. Show on the safety.

Looking at them.

<unk> group heterozygous or homozygous, there's a difference and if these drugs were similar you wouldn't expect such a dramatic difference I mean, we're talking about.

Some subgroups as it can be as much as three to one ratio on the safety and that's why I think.

Geoff Meacham: And that's why I think, you know, we're going to spend an awful lot more time analyzing what's really going on here. And that's what I said at the outset. We're really just at the start of this. There's still so much we don't know. But this is going to generate an awful lot of research, and we're going to start digging into this and understanding all of these different subtleties that are there. But I think these differences are going to be quite important.

We're going to spend an awful lot more time analyzing what's really going on here.

So that's what I said at the outset, we're really just at the start of this there's still so much we don't know, but this is going to generate an awful lot of research and we're going to start digging into this and understanding all of these different subtleties that are there, but I think these differences.

Geoff Meacham: As Priya said, the jury's still out on that, but we have an awful lot of signs about what's really going on here. And that's why, as a company of Viagin, you know, we don't see the launch of Lekembe as the end to our commitment to Alzheimer's. As Priya pointed out, we have other programs and products for Alzheimer's, and we're going to be continuing to do research because it is really our ambition to be, along with our partners, A Side, the absolute leader in what we think is going to be an extremely significant

We're going to be quite important as pretty as said.

The jury is still out on that but we have an awful lot of signs about what's really going on here and that's why.

As a company is Biogen, we don't see the launch of La <unk> is the end to our commitment to Alzheimer's.

<unk>.

Pointed out we have other programs in Alzheimer's and we're going to be continuing to do research because it is really our ambition to be along with our partners <unk> side. The absolute leader in what we think is going to be an extremely significant market.

Operator: The next question comes from Chris Schott with J. Morgan.

Alright. Thank you for the insights next question. Please.

Chris Schott: Great, thanks very much for the question. I just wanted to appreciate all the callers on the call, but I just wanted to come back to Lecombe.

Next question comes from Chris Schott with J P. Morgan.

Great. Thanks, very much for the question.

I just wanted to I appreciate all the color on the call, but I wanted to come back to the law can be and kind of ramp from here.

Chris Schott: but I just want to come back to Lecombe and kind of ramp from here. I know you've talked about this being kind of a gradual process, but based on the early feedback you've had from the market with the launch, I guess any incremental color on whether this is either going faster or slower than you might have anticipated, and maybe just as part of that would have been the biggest kind of positives or negatives on the rollout so far as we just try to kind of better assess how to think about these next few quarters and years from Thanks so much.

I know you've talked about this being kind of a gradual process, but based on the early feedback you've had from the market with the launch I guess any incremental color on just how theyre going faster or slower than you might have anticipated and maybe just as part of that would have been the biggest kind of positives or negatives on the rollout. So far so just trying to kind of better assess how to how to think about these next few quarters in <unk>.

From here thanks, so much.

Geoff Meacham: Well, as to what you anticipate, it's kind of hard. As I say, this is only the second time in my career where I've actually seen a brand new therapeutic area actually open up. And so when you think about Alzheimer's patients and visiting neurologists, beyond cognitive tests and, as I say, perhaps prescribing the anti-cholinergic site, Denepazil, there hasn't really been much to do. And now we do have a treatment, and this is, this is going to upend a lot of the processes within neurology practices. It's extremely exciting, but, you know, really the uptake is geared to how prepared the sites are. And this is variable around the country.

Well as to what you anticipate it's kind of hard as I say this is it.

This is only the second time in my career, where I've actually seen a brand new therapeutic area actually open up.

And so when you think about Alzheimer's patients and visiting neurologists.

Beyond cognitive tests, and as I say, perhaps prescribing.

The anticholinergic site Donepezil hasn't really been much to do and now we do have a treatment and this is this is going to up in a lot of the processes within neurology practices, it's extremely exciting but really the.

The uptake is geared on how.

Prepared or the sites and this is variable around the country. You have had some side obviously they've been involved in clinical trials some of them.

Geoff Meacham: You've had some sites, obviously, they've been involved in clinical trials. Some of them have different patient populations, and we see that some sites are quite advanced and are ready to go. Some sites, you know, have been more in the weight in C mode, but I think they are all ramping up.

Different patient populations.

We've seen some sites are quite advanced and are ready to go.

Some sites.

<unk> been more in a wait and see mode.

And I think are all ramping up one of the things that we've been doing is.

Geoff Meacham: One of the things that we have been doing is really trying to figure out where the sites that are really ready are and actually deploying our resources to those sites with then a secondary type of approach to sites that aren't quite ready, and helping them. So it all depends on really how advanced the sites are, and how ready they are; that's really going to define the uptake. And that's why we have to target our resources to that and really assess the sites for site activation, if you'd like.

Is really trying to figure out where the sites that are really ready.

And actually deploying our resources to those sites.

With then.

A secondary type of approach to sites that arent quite ready and helping them. So so it all depends on really how advanced the sites on how ready they are that its really going to define the uptake.

And Thats why we have to target our resources to that and really assess that.

The site activation, if you'd like but so far.

Geoff Meacham: But so far, we're getting a lot of positive feedback, and physicians are getting a lot of inquiries from patients. I think they will have to figure out exactly who is the right patient for this, and that's where we have to do a lot of education. And we have these online programs and other programs to help educate physicians. There's a significant amount. I mean, you just talk about what we've been talking about in terms of these protofibrials, about the different patient populations, all of those things are going to engage the whole neurology community here. But, you know, so far, you know, everything is, as far as we're concerned, the launch is going as planned.

Getting a lot of positive feedback of physicians are getting a lot of inquiries from patients.

Think they will have to figure out exactly what's the right patients for this and Thats, where we have to do a lot of education. We have these online programs and other programs to help educate physicians cigna.

A significant amount I mean, you just talk about.

What we've been talking about in terms of these proto fibrils about the different patient populations all of those things are going to engage the whole neurology community here.

But.

So far.

Everything is as far as we're concerned the launches go into plan.

Operator: Yes, our last question comes from Paul Mateus with Steefell.

Thanks, Chris and if we can just take our last question operator.

Paul Matteis: Hey, thanks so much for taking my question. I wanted to just briefly come back to Zuranelone.

Yes, our last question comes from Paul Matteis with Stifel.

Hey, Thanks, so much for taking my question I wanted to just briefly come back to us or analog.

Paul Matteis: I've been really surprised by the lack of discussion on the call and the prepared remarks and take prior calls. And can you just, am I overly reading into this? I guess you're gearing up for potentially a new antidepressant approval. And Chris, at one point, you called this your most undervalued asset. So are you as bullish on this drug as you were before? And I guess if you didn't get the MDD approval but only got PPD,

Really surprised by the lack of discussion on the call in the prepared remarks in prior calls and can you just am I overly reading into this I guess youre gearing up for potentially a new anti depressant approval and Chris at one point you called this your most undervalued asset. So are you as bullish on this drug as you were before and I guess, if you didn't get the <unk> approval.

Paul Matteis: but that only got PPD, you know; how would Biogen execute on that opportunity? Thank you. Look, we're late.

When we got PPD.

Biogen.

Execute on that opportunity. Thank you.

Geoff Meacham: Look, we're in late stage review, so I think it's pretty normal that, you know, we don't want to, we don't want to disturb that process. And, you know, we obviously don't want to say anything that, um, you know, affects the FDA. I have to confess to a little bit of superstitiousness on my side. And I just, I'd like to see the FDA decision, and then we'll be happy to talk lots about it. But the opportunity is huge out there, Paul.

Look we are in late stage review, so I think it's pretty normal.

We don't want to we don't want to disturb that process and.

We obviously.

Don't want to say anything.

Yeah.

Affects the FTAA.

To confess to a little bit of superstitious Miss on my side and I, just I would like to see the FDA decision and then we'll be happy to talk lots about it but the opportunity is huge there Paul.

Operator: This does conclude today's conference call. Thank you for your participation. You may now disconnect.

Alright, Thanks, Chris and thanks to everybody today for joining.

This does conclude today's conference call. Thank you for your participation you may now disconnect.