Biogen - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 total revenue was $2.431B, up 6% YoY (8% at constant currency); non-GAAP diluted EPS was $3.02, reflecting a ~$0.95 impact from a $165M upfront payment to Stoke Therapeutics; GAAP diluted EPS was $1.64.
• Strength from launch products: LEQEMBI in-market sales ~$96M (U.S. ~$52M), SKYCLARYS global revenue ~$124M, and ZURZUVAE revenue ~$28M; MS franchise declined 11% YoY amid competition.
• Guidance updated: 2025 non-GAAP diluted EPS $14.50–$15.50 (prior $15.25–$16.25) to reflect the $165M upfront offset by ~$0.20 FX tailwind; total revenue expected to decline mid-single digits YoY; combined non-GAAP R&D+SG&A of ~$3.9B maintained.
• Management highlighted reduced tariff risk due to U.S.-based manufacturing and diversified ex-U.S. revenue; reiterated steady sequential growth in launch products and pipeline execution as catalysts (subcutaneous LEQEMBI maintenance PDUFA Aug 31, 2025).

What Went Well and What Went Wrong

What Went Well

• Launch portfolio momentum: “our commercial portfolio…now gotten to be about 45% of our product revenue” with LEQEMBI ~$96M, SKYCLARYS ~$124M, ZURZUVAE ~$28M; approvals in EU (LEQEMBI), U.K. and Brazil (SKYCLARYS).
• Pipeline advances: BIIB080 received FDA Fast Track; felzartamab Phase 3 initiated in AMR with more Phase 3 starts in IgAN and PMN planned; zorevunersen deal expands rare disease pipeline.
• Operating discipline: Combined non-GAAP R&D+SG&A guided to ~$3.9B in 2025; Fit for Growth remains on track to deliver ~$1B gross / $800M net savings by end of 2025.

What Went Wrong

• MS franchise pressure: Global MS product revenue fell 11% YoY, impacted by TYSABRI biosimilar in Europe and TECFIDERA generics globally; further TECFIDERA generics expected in Europe (France, Netherlands).
• Margin mix headwind: Cost of sales increased to 26% of revenue (non-GAAP 24%) due to higher lower-margin contract manufacturing, partially offset by launch product mix.
• Non-GAAP EPS down 18% YoY to $3.02, primarily reflecting ~$0.95 from the $165M Stoke upfront in acquired IPR&D; GAAP EPS down 39% YoY to $1.64.

Transcript

Operator (participant)

My name is Melinda, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Biogen first quarter 2025 earnings call and business update. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question-and-answer session. If you'd like to ask a question during this time, simply press star one on your telephone keypad. Please limit yourself to one question to allow other participants time for questions. If you require any further follow-up, you may press star one again to rejoin the queue. Today's conference is being recorded. Thank you. I would now like to turn the conference over to Mr. Tim Power, Head of Investor Relations. Mr. Power, you may begin your conference.

Tim Power (Head of Investor Relations)

Thanks, Melinda. Good morning and welcome to Biogen's first quarter 2025 earnings call. During this call, we'll make forward-looking statements which involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review. Our earnings release and other documents related to our results, as well as reconciliations between GAAP and non-GAAP results discussed on this call, can be found in the investors' section of biogen.com. We've also posted the slides to our website that we'll be using during the call. On today's call, I'll be joined by our President and Chief Executive Officer, Chris Viehbacher, Dr. Priya Singhal, our Head of Development, and Robin Kramer, our Chief Financial Officer. We'll 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'll now turn the call over to Chris.

Chris Viehbacher (CEO)

Thank you, Tim. Good morning, everybody. Maybe first, a warm welcome to Robin. This is your first quarter as CFO of Biogen, Robin. We had a very good start to the year, a strong quarter. You know, Biogen is really a tale of two companies, in my view. There is one company which has been an MS company, and that portfolio, as you all know, has been gradually declining. There is a new Biogen emerging. When I look at the rare disease business and iads or ZURZUVAE and Leqembi and Vumerity, we actually have a commercial portfolio that we are actively promoting that has now gotten to be about 45% of our product revenue. Those products mostly have a very long runway to continue to grow. We have been talking about it for a few years, but I think now this is actually starting to become visible.

We're rolling these products out worldwide. We had the approval of Leqembi in Europe, for example, which is a very important approval for us. We have also seen the approval of SKYCLARYS in the U.K. and Brazil. Of course, the next lever of growth is going to be our pipeline. There we're very happy to get the FDA Fast Track designation for our ASO targeting BIIB080. That's remarkable since we haven't actually even read out phase II yet, and I think is a sign of confidence in the importance of this potential new medicine in treatment of Alzheimer's. We have initiated the phase III TRANSCEND study for felsartamab in AMR. We have always said we've got a very strong balance sheet, and we're going to continue to patiently and in a disciplined way augment the pipeline through external innovation.

We're very happy about the partnership that we built with zoravonersen in Dravet syndrome with Stoke. That's going to be an important medicine. We have that for the territories outside the United States. Now, if we turn to where we are on these new product launches, Leqembi, I mean, look at that, $96 million. That's almost $100 million. Now we're into serious product territory. We have, as I said, obtained the marketing authorization in the EU. It's important not just because of the market potential in the EU, but now we can say that this is a drug that has been recognized for its importance, its efficacy, its safety profile by all major regulators in the world. That's an important sign of confidence. This is, again, the first disease-modifying agent that has ever been approved in Alzheimer's. This is a brand new territory.

I think having that kind of regulatory endorsement is extremely important. As we all know, this has been a challenging product to launch given the workload that this implies for the treating physician. We are looking very much forward to a number of the innovations that are coming along that we think can actually reduce that workload. First, of course, is one we have in the bag in the first quarter, which was the approval for the IV maintenance, which will allow us to reduce the dosing for patients after 18 months of treatment to once per month. We are going to make that even easier for physicians with hopefully an approval in August for the subcutaneous formulation. That offers the potential of at-home administration with an auto injector.

Of course, in the first half of next year, we're looking forward to the approval, hopefully again, of the subcutaneous formulation for initiation, which will dramatically reduce the need for infusion bed capacity. In addition, this isn't related to Eisai or Biogen. These are independent companies, but there are companies who are pursuing approval for biomarker tests, blood-based biomarker tests. Hopefully, at some point, we'll be able to see those blood-based biomarkers supplant the need for PET scans and/or lumbar punctures. There is an awful lot of catalysts coming for Leqembi. We are very much encouraged now that we've got critical mass behind this. We've also launched a new approach on commercialization from 1st of April. We and our partners, Eisai, have spent a lot of time going back through the data, thinking about the lessons learned, and have adapted our commercial approach.

One of the things, for instance, that we will be doing this year is now starting direct patient engagement in Alzheimer's. Now, switching to ZURZUVAE, this is a product that continues to do nicely. We had Q1 sales of $28 million. Since launch, we have now been able to treat 10,000 women with PPD. The majority of those prescriptions are actually first-line therapy for postpartum depression. A lesson that we learned along the way was actually the physician who is the most important in treating postpartum depression is actually not the psychiatrist, but the OB-GYN. 80% of our scripts in Q1, for instance, were from OB-GYNs. One of the most important things here is you are talking about a one-and-done treatment, essentially. To make this commercially viable, you actually need to have writers expand. We did see that.

We were able to expand the number of physicians writing this by 20% in Q1. More importantly, it's getting physicians to write repeat prescriptions. One of the most encouraging things is that we're not only seeing the repeat prescriptions, but I think as physicians gain the experience with ZURZUVAE, they're also gaining the confidence to actually go and be more proactive about diagnosing postpartum depression. I think we're actually seeing a virtuous cycle here where this positive response by patients is encouraging a greater attention to a disease that, unfortunately, I think has been sadly neglected for so many women. Very good progress on ZURZUVAE. We've completed our own field expansion at Biogen, and that's been in place since the middle of the quarter. Now, if I turn to SKYCLARYS, we had worldwide sales of $124 million.

That's up 59% year-over-year and 21% quarter-on-quarter. We did have some effect from the IRA. You all know about the Medicare tax that has been put in place, and that had an effect. Actually, our gross sales in the U.S. rose faster than our net sales in this quarter. One of the things about this disease, of course, is that this is of European origin as a genetic disease. Essentially, where you find the patients is where all the European explorers went in the world. Logically, of course, the biggest number of patients is in Europe. There we have had an awful lot of success in finding patients. It's actually, I think, easier to find them in Europe because they tend to be in centers, whereas they tend to be all over the country in the U.S.

Even in the U.S., our U.S. team has been very creative in thinking about new tools to identify where patients are and find them. I can remember years ago with the acquisition of Genzyme, learning the key marketing component of rare disease, and that is finding needles in haystacks. That is what this is all about, looking through social media, following family trees, and looking for patients. How are we doing on that? If I could see the next slide, you can see that we have got a nice steady growth in patient numbers. We have got about 2,400 patients on therapy globally. It is now available in 26 markets. I would caution that not all of those patients yet are paying patients. We have had an approach of having early access programs in countries to ensure that patients benefit from treatment as soon as possible.

We are following up then with negotiations on a country-by-country basis. The uptake is very satisfying. When you think about the penetration into this market, as we benchmark this, the penetration is actually much higher than the average analog rare disease launch. Actually, in line pretty much with the SPINRAZA launch, I wasn't here for that, but as we've gone back and looked at it, the SPINRAZA launch was actually one of the best, if not the best launch of a rare disease product. We are very happy with the progress of SKYCLARYS. Brazil approval is actually a very important market for us. There are a lot of patients in Brazil, again, going back to where Europeans went in the world. Having been in Brazil last year and met with a number of physicians, I know that this approval will be very welcome to patients there.

Moving on to the pipeline, I think we made an awful lot of progress here as well. I mean, you've heard me say, I think, time and time again that I think we had an extremely high-risk pipeline when I came here. First of all, it was highly concentrated in neuroscience. That is always an issue when you only have one therapeutic area. Neuroscience was also a little complicated because we do not always understand the underlying disease biology. The slowly progressing nature of those diseases means that you often could not do a phase II study. You go immediately into a phase III study. You end up doing incredibly expensive proof of concept studies as phase III. Now, neuroscience is who we are, and we have not wanted to abandon that by any means. There is huge unmet need.

We did feel that we needed to add another pillar to our company's future growth. The logical place to go was immunology. We've been in immunology since the founding of our company, particularly through MS. I quote my good friend and former colleague, Elias Zerhouni, who often said, "We describe too many diseases by their symptoms and not by their cause." When you get into immunology, actually, what's important is really the immune pathways. That can lead you into a whole number of different indications. That is something that Biogen actually understands very well. You can see on the left chart, we've been able to balance this now.

We have got a nice balance between neurology, which has been the pride and home of Biogen for many years, but also, I think, immunology, where I think we have a very strong right to play. Of course, with that concomitantly, if you look at the right chart, in immunology, one of the things you can do is do a proof of concept. Felsartamab is probably the best example of that. That is an ideal product where we've been able to get a very strong proof of concept. There is never a guarantee in any clinical trial, as all of you know. I think as we look at the phase III clinical trials for felsartamab, we feel a whole lot more confident about that than some of the other trials where, again, we haven't had that.

As you look at our pipeline, I think if I could go to the next chart, first thing I would point out, we have five phase III studies that are initiating this year. That is important from a number of points of view. First is, obviously, there is a huge potential that is behind all of those products, and we're getting into late-stage development. It is a sign of maturation of our pipeline. The second thing is we're also increasing the number of shots on goal. We're not dependent on one or two projects. We're going to continue to build that. I guess the third thing I would point out is we have a number of data readouts that are coming. As we move into phase III, we'll be able to also have some important readouts already in 2026.

I think that's a nice cadence that is going to help underpin the continued emergence of that new Biogen. I think very good progress, and Priya is going to talk more about that. I guess the last topic I would just cover is one that I think is on everybody's mind, which is tariffs. It's a new topic for us all. In 35 years in this industry, I've never had to spend as much time as we as a team have on tariffs in the first quarter. This is a very complicated area. I know for investors, this is very complicated. I did want to point out a number of features of Biogen, which I think differentiate Biogen from some of our colleague companies in the industry.

A number of you have been using, for instance, the tax rate as a surrogate for what the tariff exposure might be. I would submit to you that that's actually not appropriate in the case of Biogen. It's for a couple of important reasons. The first is that when you look at our product sales, 75% of our 2024 U.S. product revenue was attributable to products that already have manufacturing operations in the U.S. In fact, Biogen actually exports more than we import. As a result, we also pay an awful lot of tax. Robin will talk about that. We pay taxes in the US at federal and state rates. The other structural difference is that approximately 55% of our 2024 product revenue came from countries outside the U.S. Now, that's pretty unusual in our business.

In most of this industry, what you see is 60%-80% of product revenues come from the U.S. Biogen is a whole lot more diversified, and that's really a function of the products that we have. As we look out for 2025, obviously, there is an exemption for the moment in place. We know that the whole tariff situation is changing daily, and it's difficult to predict. At least what we can say is, even if we lost the exemption and all of those tariffs that were announced by the U.S. administration on April 22nd, 2024 were to actually not only come into being, but also apply to pharmaceuticals, this would still not affect our 2025 financial outlook. That's partly because of the long supply chains we have.

It's partly because, and I have to credit our supply chain team, they've built levels of inventory, not just of products, but also of different ingredients and materials, because, again, this is a highly complex area. Just structurally, we are more of a U.S.-based company and always have been. Actually, we're quite proud of that. With that, I'm going to pass that on to Priya to pick up the story on R&D.

Priya Singhal (EVP and Head of Development)

Thank you, Chris. This quarter, we made significant progress advancing and expanding our high-conviction late-stage pipeline. We believe our pipeline will play a critical role as we work to deliver sustainable long-term growth enabled by increased momentum in our data flow. This includes potential key approvals this year and expected registrational data starting next year. This quarter, we delivered key milestones across Alzheimer's, immunology, and rare disease. First, as Chris mentioned, our tau-targeting ASO, BIIB080, received Fast Track designation from the FDA in Alzheimer's disease in April. Alzheimer's is a complex and fatal disease that we believe will require multiple therapeutic approaches to address its diverse pathologies. BIIB080 is a differentiated approach to targeting tau, and the Fast Track designation was based on encouraging phase Ib data, which showed dose-dependent CSF tau reductions, decreases in tau-PET signal, and favorable trends on exploratory cognitive and functional measures.

In immunology, we initiated the TRANSCEND phase III study of felsartamab in AMR. This is the first of three phase III studies that we expect to initiate this year for felsartamab, with additional studies in IgAN and PMN anticipated by mid-year. Importantly, we expanded our late-stage rare disease pipeline, where we acquired rights to zoravonersen in Dravet syndrome in all territories outside the United States, Canada, and Mexico. Dravet syndrome is a developmental and epileptic encephalopathy characterized by severe recurrent seizures and, importantly, significant cognitive and behavioral impairments. Importantly, more than 90% of patients continue to experience seizures despite treatment with the best available anti-seizure medicines, and there are currently no medications approved that meaningfully address the underlying cognitive and behavioral aspects of the disease.

Zoravonersen is an investigational ASO that is designed to potentially, for the first time, treat the underlying cause of Dravet syndrome by increasing the NAV1.1 protein production in brain cells. What encourages us about this asset is the phase I/IIa data that we've seen, specifically in respect to cognition and behavior as well as seizure. Looking at the right-hand side of this slide, you can see why. Scores on the Vineland-3, a widely used standardized assessment of behavioral outcomes, show that zoravonersen resulted in substantial improvements across multiple measures of cognition and behavior. This was initially observed within the phase I/IIa study with continued improvement in the open-label extensions out to two years. We believe these results support the potential for zoravonersen to be the first disease-modifying therapy in Dravet syndrome.

We look forward to working with Stoke on advancing the phase III EMPEROR study, which we expect to initiate in the next few months. We continue to remain focused on advancing the standard of care in Alzheimer's, and I believe we've made significant progress. Starting with Leqembi, we are really excited about the recent approval in Europe. We're also continuing to advance the subcutaneous formulation for both treatment maintenance and initiation to further aid patient optionality and convenience. Furthermore, we believe that the strength of the Leqembi real-world data continues to support the urgency to treat symptomatic early AD patients today. We look forward to the potential of blood-based diagnostics to help remove barriers in the healthcare system. I also believe it is important that we continue to execute on the opportunity in pre-symptomatic AD.

Clarity AD established that removing plaque in a symptomatic early AD population leads to clinical benefit, and that symptomatic patients with low or no tau can potentially achieve an even greater benefit. We believe AHEAD 3-45 is the right study designed to evaluate the potential benefit of Leqembi in a true pre-symptomatic population. Beyond Leqembi, we continue to target Alzheimer's disease biology with the potential next wave of therapies, including BIIB080 and novel delivery technologies. Overall, I'm encouraged by the progress we're making in Alzheimer's and believe we are well-positioned to lead the evolution of the treatment landscape. Returning to the pre-proof of concept pipeline, I'm excited again about the progress we've made in rebuilding this area of the pipeline.

We are applying a strong scientific rationale as we invest in these programs, using a disciplined, data-driven decision-making approach as we aim to build out a sustainable pipeline with a promising pre-POC pipeline. During this quarter, we made significant progress in this area, including completing enrollment in the phase II study for our LRRK2 inhibitor for idiopathic Parkinson's disease with Denali. Applying our approach to follow the science, these phase II data, which are expected next year, will help provide us with clarity on the potential path forward to phase III. We will continue to maintain this approach as we work to grow the pipeline by introducing more assets into the early-stage development, both from our organization as well as external innovation sources. With that, I would now like to hand the call over to Robin for a financial update.

Robin Kramer (EVP and CFO)

Thank you, Priya. I'm pleased to be participating in my first earnings call since stepping into the CFO role. I'd like to begin by extending my gratitude to those in the investment community with whom I've had the pleasure of speaking with in my first few months as CFO, and I'm looking forward to spending time with many more of you in the near future. To start, I would like to provide a few highlights on our first quarter financial results. Please note the comparisons I'm about to make are versus the first quarter of 2024, unless otherwise noted. Total revenue for the first quarter of $2.4 billion was up 6% year-over-year, aided in part by the timing of SPINRAZA and corporate partner revenue shipments.

Our four launch products delivered approximately $200 million of revenue in the first quarter, an increase of 22% quarter-over-quarter and more than doubling year-over-year. Our first quarter non-GAAP diluted EPS was $3.02, which was down 18%. This includes the $165 million upfront paid in connection with the Stoke transaction, which impacted EPS by approximately $0.95 in the quarter. Absent that charge, first quarter non-GAAP diluted EPS would have been $3.97, up 8% year-over-year. In the first quarter, we generated $222 million of free cash flow, which includes the $165 million upfront paid to Stoke. We ended the quarter with $2.6 billion of cash. Shortly, I will provide an update on our full-year guidance. Now I'll turn to a few comments on revenue and commercial dynamics in the first quarter.

Starting with our MS franchise, our global product revenue declined 11% year-over-year, driven primarily by competition. This included impacts from a biosimilar for Tysabri in Europe and generic competition for Tecfidera globally. We have started to see generics launch in certain countries in Europe, such as France and the Netherlands. While we will continue to vigorously defend our IP, we do expect to see further impacts from Tecfidera generics in Europe this year. A bright spot for MS in Q1 was Vumerity, where we saw an increase in demand, and Vumerity remains the number one branded oral therapy. For SPINRAZA, we continue to be encouraged by the consistency in demand globally, which includes growth in the U.S. of 4% year-over-year.

In the first quarter, ex-U.S. SPINRAZA revenue benefited from a one-time VAT refund and the timing of shipments in certain markets, which together was a benefit of approximately $26 million versus Q1 of 2024. As I mentioned earlier, our four launch products together delivered $200 million of revenue to Biogen in the first quarter, an increase of 22% quarter-over-quarter and more than doubling year-over-year. We continue to see steady sequential growth of Leqembi, with first quarter global in-market sales booked by Eisai of approximately $96 million, up approximately 11% sequentially from the fourth quarter of 2024. Global SKYCLARYS revenue was $124 million, a sequential increase of 21% versus the fourth quarter of 2024, driven by continued geographic expansion outside the U.S. Revenue for SKYCLARYS in the U.S. was $69 million, impacted by expected Medicare discount dynamics, partially offset by demand growth.

Both ZURZUVAE and SKYCLARYS continue to grow sequentially, driven by increases in demand for each product. The increase in corporate partner revenue in the first quarter was driven by the timing of certain batch commitments related to our contract manufacturing business, some of which was associated with batches of Leqembi. We continue to believe that corporate partner revenue will be roughly consistent when comparing full year 2025 with full year 2024. Due to planned maintenance activities and the timing of batch releases, we expect minimal corporate partner revenue in Q4. I'll now turn to a few comments regarding expenses. First quarter non-GAAP cost of sales was impacted by increased lower margin contract manufacturing revenue.

Non-GAAP core operating expense, or R&D plus SG&A expense, decreased 1% year-over-year as benefits from our R&D prioritization and fit for growth initiatives allowed us to absorb incremental spend associated with our advancing and expanding development pipeline, as well as our product launches. Non-GAAP operating income included approximately $201 million of acquired in-process R&D charges, including the $165 million upfront payment made in connection with the Stoke transaction, which had an approximately 95% impact to EPS. Excluding the $165 million upfront payment, non-GAAP operating income would have been $748 million, up 7% year-over-year. As a reminder, we and our peers are required to present upfront and milestone charges in GAAP and non-GAAP operating results. Commencing this quarter, we will break out acquired in-process R&D, including upfronts and milestones in a separate line item in our P&L, consistent with many of our peers.

We believe this provides better transparency about our core R&D activities and business development activities. We plan to disclose a schedule of expected charges for each quarter ahead of our earnings calls to aid in modeling. Now I'd like to provide a brief update on our balance sheet. We generated $222 million of free cash flow in the first quarter, which takes into account the aforementioned $165 million upfront payment to Stoke. We ended the quarter with $2.6 billion of cash and approximately $3.7 billion of net debt, and believe that our balance sheet remains strong, allowing us to continue to invest in both internal and external growth opportunities. Turning now to guidance, we're pleased that our expected underlying business outlook for the year has not materially changed.

We are updating our full-year EPS guidance to reflect the approximately 95% impact from the Stoke transaction, along with $0.20 of an earnings tailwind from foreign exchange impacts from a weaker U.S. dollar. We now expect our full-year 2025 non-GAAP diluted earnings per share to be between $14.50-$15.50. We continue to expect total revenue for 2025 to decline by a mid-single-digit percentage, driven primarily by an increased decline in our MS business. We expect that our launch products will generate sequential revenue growth, but we expect the absolute MS revenue decline to be steeper than this growth in 2025. As a reminder, we expect a potential biosimilar entry for Tysabri in the U.S., which we believe could occur sometime in the fourth quarter of this year.

As I mentioned a few minutes ago, we have started to see generics for Tecfidera enter in Europe, and while we will continue to vigorously defend our IP, we do expect to see further impacts from generics in Europe this year. As I noted earlier, we believe that corporate partner revenue will be roughly consistent when comparing full year 2025 with full year 2024. Due to planned maintenance activities and the timing of batch releases, we expect minimal corporate partner revenue in Q4. We believe we are on track to deliver the $1 billion of gross savings and $800 million of net savings under our fit for growth initiative. As you can see on the slide, many of our guidance considerations have remained the same as when we guided for the year back in February. I will also refer you to our press release for other important guidance assumptions.

A topic of great interest to many investors is the impact to our business from tariffs. Biogen currently does not expect a material impact in 2025 from potential tariffs as announced by the U.S. administration on April 2nd, 2025, even if the exemption for pharmaceuticals were to be removed. This is based on both a significant portion of U.S. revenue being derived from products which have manufacturing operations in the United States, as well as our current global inventory positions. Our guidance range also considers potential retaliatory tariffs from China as announced. However, the U.S. and international tariff landscape remains uncertain, and our guidance does not contemplate any new tariffs that may be announced in the future.

I will also note that when excluding one-time tax impacts, our tax rate is broadly a function of our business mix and therefore does not serve as a good proxy for estimating potential tariff impacts. Biogen's effective tax rate is a reflection of our U.S. market revenues being almost entirely taxable in the U.S. at the full federal plus state tax rates. We also generate a relatively high percentage of our revenue outside the U.S., which is taxable in those markets and in the U.S. under the GILTI regime. We will continue to monitor and analyze the current and future US and reciprocal tariff landscape as it evolves. I'll now pass the call over to Chris for some closing comments.

Chris Viehbacher (CEO)

Thank you, Robin. Again, if I come back to where is Biogen going, you just have to look at our pipeline. We've got another four phase restarts. That's after the phase restart already in AMR. We've got three clinical trial readouts coming. We've got three regulatory decisions coming. One of the other things I'll say is in this first quarter is we did a major restructuring of research, and I'm really quite excited about what we're doing there. As an industry, we rely way too much on late-stage business development. The most cost-effective place to do collaborations is actually preclinically, and we have a goal of signing four to five new research collaborations this year. Just on research, Biogen has been known for breakthrough medicines. In fact, all four products that we launched in 2023 and 2024 are first-in-class, first-ever disease-modifying agents.

We go after some of the hardest-to-treat diseases. One of the problems about being breakthrough is that you're in diseases where a lot of the investment committee is not already doing an awful lot of research. If I take AMR, the antibody-mediated rejection, for example, there's really no treatment there today. One of the things that I think we feel that we would like to do is do a deeper dive into some of these diseases and pipeline assets, not with the intention of presenting new data, but to just say, "Okay, what's the competitive landscape? What's Biogen's right to win here? What's the patient journey? What is it going to really take to move the needle on one of these diseases? What's the reimbursement landscape going to be like?

What's the epidemiology? If I look at AMR, for example, I think this is a huge opportunity for Biogen. We saw 80% resolution of AMR in phase II trials. We have a high level of confidence in that. Of course, a lot of people are interested in IgAN. What's it going to take to really be interested in IgAN? I spent an entire day with our West Coast hub just on Felsartamab. There's a huge amount of things going on there. Even things like all CD38s are not created equally. What are they like? We would like to invite whoever's interested to come to some of these thematic seminars. The first one we're going to hold on June 11th. Hopefully that'll be the first of the series. It's just meant to be educational and a deeper dive.

We will have some of our top internal experts here on all of these subjects to answer any and all questions. With that, Tim, I'll turn it back to you for Q&A.

Tim Power (Head of Investor Relations)

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

Operator (participant)

Certainly. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. As a reminder, please limit yourself to one question. If you require any further follow-up, you may press star one again to rejoin the queue. Your first question comes from Brian Abrahams with RBC Capital Markets. Please go ahead.

Brian Abrahams (Managing Director and Biotechnology Equity Research Analyst)

Hey, good morning. Thanks for taking my question. Congrats on the recent Leqembi approval in Europe. Can you talk about what the rollout strategy could look like there and your sense of what the reimbursement process and amenability could be? Thanks.

Chris Viehbacher (CEO)

Yeah, thanks, Brian. That is certainly going to take some time. The fact that the approval took a while tells you that there's an awful lot of thought going into that. One of the things about when you launch a first-in-class disease-modifying agent is that you're not displacing anything in a budget. These types of products are incremental adds to the total healthcare budget of countries. That is sometimes where it's easier to launch a product that's kind of a me too that comes in and can simply cannibalize the budget of another product. This is obviously a significant market in Europe. Europe is an aging continent, even more so than the United States. There are an awful lot of eligible patients. We'll be taking that with our partners Eisai, market by market. I do think that also Leqembi has run the gauntlet.

I mean, there has been a full examination of the efficacy, the safety, but also the economic benefit. As you know, the EMA does take into account some aspects of the economic impact. I think that in some ways, this deep interrogation by all of the countries of the European Union, by the way, I think should actually, if anything, help us as we go into reimbursement because this has been fully examined and fully evaluated. I think it'll still take some time. We'll go to some of the countries we'll launch clearly faster, as is the case generally in Europe.

Tim Power (Head of Investor Relations)

Thanks, Chris. Let's go to the next question, please.

Operator (participant)

We go next to Evan Seigerman with BMO Capital Markets.

Evan Seigerman (Managing Director and Senior Equity Research Analyst)

Hi, all. Thank you so much for taking my question. I want to touch again on Leqembi, but this time with the subcutaneous formulation. Maybe remind us how that potential for at-home administration can help accelerate sales in the United States. We're seeing some good uptake, but I think that that could really help get things going further and maybe some of the hurdles that you have to overcome to really get full penetration there. Thank you.

Chris Viehbacher (CEO)

All right. The first is subcutaneous for maintenance. These are patients who have been undergoing biweekly infusions now for 18 months. I think there are two aspects for the commercial. First is we are busy focusing on making sure that physicians and patients understand the need to continue on therapy. There we have long-term extension data, and we have demonstrated that even 36 months after treatment, patients are still doing better on treatment than if they stop treatment. There is the whole establishment of the maintenance market. These are also older patients, and it is not always easy to get to in infusion centers. Obviously, we make it easier with once-monthly dosing. Our view is that this is going to be more effective as a long-term chronic therapy if you have a patient-friendly administration like subcutaneous.

I think as a first step, the subcutaneous really helps establish and extends the treatment life of a patient in maintenance. And then, of course, in the initiation phase, that'll be interesting to see. I think in major urban centers, I think we may see that some physicians may want to continue, at least in the first few months of therapy on infusion because they're timed with the MRIs to monitor ARIA and then move to subcutaneous. I can imagine in more rural settings where getting to infusion centers is not as easy for patients that the subcutaneous might even be right from the get-go. I think it'll depend a little bit on where you are as a patient, but there's no question that this is, again, a simplification of the physician's workload.

It's a heavy load to think about the PET scans or the lumbar punctures, going to negotiate for use of the infusion beds, which are often considered to be the domain of the oncologist. Just from a caregiver point of view of bringing the patient to the infusion center, I think this will be welcomed by them as well that they can do this at home. I think this is an enabler for the patient, but also for the physician.

Tim Power (Head of Investor Relations)

Melinda, can we go to the next question, please?

Operator (participant)

We go to Salveen Richter with Goldman Sachs.

Salveen Richter (Managing Director and Senior Biotechnology Equity Research Analyst)

Thank you. Good morning. Just following up on Evan's question here, could you just speak to your thoughts on Leqembi uptake and growth on the forward, not only with subcutaneous maintenance dosing in the second half, but also with Fujirebio's in vitro diagnostic, which should enter the market as well? Thank you.

Chris Viehbacher (CEO)

Yeah, we don't have that much information about the diagnostic. The process to get a diagnostic approved is different, obviously, than a drug. The reimbursement situation is also different. I do think the recent report by the Alzheimer's Association highlighted the need for early diagnosis. One of the issues that has, as I think, been in Alzheimer's is that most patients are actually seeing their primary care physician, and it can take quite a long time for the physician to distinguish, is this just part of the normal aging process? Is this some other form of dementia, or is this Alzheimer's? Two or three years can go by, and sometimes even longer before the Alzheimer's diagnostic is done through a referral to a neurologist.

Now, one of the things that that Alzheimer's report also pointed out is that there's a real interest in getting treatment earlier and that the earlier you can get to a patient before there has been too much neuronal damage or death, the better. I think there is a real effort to be done to really get those diagnostics established. The benefit really is, I think, twofold. One is hopefully we can get patients on treatment at a much earlier stage of their disease. We believe, and there's obviously studies ongoing to actually gain the evidence of that. Even the data that we presented at CTAD in 2023 of low-tau patients, which is surrogate for early-stage patients, demonstrated that 60% of patients were stable after six months. Actually, 70% were stable after six months, and 60% actually showed some level of improvement.

I think the blood-based diagnostics are going to be extremely important. Again, we have to wait and see where those companies are in the regulatory process. Can we go to the next question, please?

Operator (participant)

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

Tim Anderson (Managing Director and Senior Equity Research Analyst)

Thank you. On Leqembi, how are you seeing the market parse out between your product and Lilly's Kisunla? Because obviously, there's a very big difference in terms of commercial positioning around finite dosing. I'm wondering who's going to kind of win that battle. Chris, you answered an earlier question starting off talking about getting docs to keep patients on therapy. Your product's been on the market now for coming up on two and a half years. Are you actually seeing some prescribers take patients off therapy after a period under the idea that once plaque is gone, you no longer need to give drugs?

Chris Viehbacher (CEO)

Yeah. I mean, I think first, I would say we would really consider the launch of this product to have been September of 2023 because that's when we had full approval. We had reimbursement from CMS. In actual fact, we didn't even really get the question on the reimbursement for PET scans clarified till about November of that year. I think we're still much earlier in that launch phase. To your question on this versus donanemab, it depends on the physician.

I think we're going to see those who like this idea of potentially saying, "Well, there's a finite point to this." Equally, what we have seen even at the recent ADPD, once you have a maintenance indication and you start to see the data, you start to realize that, actually, once you've removed the plaque, you're not done because there is some return of the plaque and potential damage. There will be obviously a lot of education to be done to demonstrate the importance of continuing on that. I think at the end of the day, it's largely going to be up to the physician and the patient. There will be patients where donanemab may be the right answer for them. It depends on their fragility, their age, whether they're in a rural setting or an urban setting.

Operator (participant)

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

Tim Power (Head of Investor Relations)

Can we go to the next question, please, Melinda?

Operator (participant)

Next up is Chris Schott with JPMorgan.

Chris Schott (Managing Director and Senior Equity Research Analyst)

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

Chris Viehbacher (CEO)

Yeah, thanks for that question. I mean, I think there has been a shift even perhaps in the last, I would say, four to six weeks in a couple of ways. I mean, valuation is one thing, but you're still really focused on getting the right thing. What I think has changed is you have a lot of healthcare investors who are facing a lot of pressure from LPs. I think they are looking for liquidity. I think we've had a lot of companies who've not really wanted to do much because valuations are low. We're also finding that there's a lot of companies who are struggling to get financing. I think if you're looking to acquire, I think there might be a little bit more of an ease in actually getting at least into a discussion.

I think even from a collaboration point of view, I think one of the things we're going to see, and I think this is also where we're doing this in the early research collaborations, I think companies will be able to provide some of the funding as some of the venture capital and some of the other sources of funding dry up for other companies. There are opportunities in there. It still requires an awful lot of patience and discipline to work your way through and find companies that work together. I do think Biogen is actually well positioned. One of the things I'm particularly proud of is we have this West Coast hub, which is essentially the high bio team. We have been able to retain virtually everybody in that high bio team.

Jane has hired our head of immunology, came from BMS, who's out there on the West Coast, and we're building out that team. I think Biogen, just because of our own biotech roots, is a company that knows how to do collaborations and I think can be a trusted partner in this. I do think this is an opportunity. Again, we look at a lot of things, but even in this environment, you still have to stay disciplined.

Tim Power (Head of Investor Relations)

Thanks, Chris. Can we go to the next question, please?

Operator (participant)

We'll go to Michael Yee with Jefferies.

Michael Yee (Managing Director and Healthcare Equity Research Analyst)

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

Priya Singhal (EVP and Head of Development)

Yes. Thanks, Mike. I would say I'd like to start by saying that with Clarity AD, we established that Leqembi clears plaque, and that translates to clinical benefit. Now, with regards to the pre-symptomatic Alzheimer's disease area, it's a big spectrum. We believe that AHEAD 3-45 is truly positioned to provide a comprehensive understanding and evaluation of how Leqembi can preserve cognition across the full spectrum of pre-symptomatic AD. The reason for that is that we are testing it in two parallel trials. The first one is AHEAD 3, which is about 400 subjects. By the inclusion criteria, are 20-40 centiloids of amyloid. The other trial is greater than 40 centiloids, which is the AHEAD 45 amyloid levels. There we are looking at whether it can prevent cognitive decline.

AHEAD 3 is looking at can we stop the accumulation of amyloid, has amyloid PET as the primary endpoint. AHEAD 45 is looking at preventing cognitive decline. We have a very sensitive clinical endpoint called the PAC-5 along with amyloid and tau PET. I think in contrast, TRAILBLAZER-ALZ 3 is really evaluating whether donanemab can slow clinical progression in a mixed population. This is based on their baseline CDR global scores. True presymptomatic is about 55%, and they have included 45% of symptomatic patients. These studies are actually quite different. We are looking at the entire range of presymptomatic patients with varying degrees of amyloid. We do expect we fully enroll. We do expect to read out in 2028. We always reserve the optionality of looking at data earlier or such. We're not commenting on that right now.

We are looking at a readout in 2028.

Chris Viehbacher (CEO)

Yeah. I think if I could just from a commercial point of view, I do think the AHEAD study will actually answer much more of the question that physicians will be looking to ask. I mean, if you're in presymptomatic patients, these are otherwise healthy people, right? The risk-benefit equation becomes different at that point. There is ARIA that is associated with both products. You're going to have to answer the question about the risk-benefit of treating earlier and at what level of amyloid burden. I think that's going to be useful because the blood-based diagnostics will tell you that if there is a presence of amyloid, they will not tell you about how much.

At some point, you sort of say 55, you had a positive blood test, someone's going to send you for a PET scan to see how much amyloid you have. Let's say you're at 50. Are you in a watch-and-wait mode, or do you actually treat? Unless you've actually done the study of looking at the full spectrum of amyloid burden, I'm not sure that physicians are going to feel comfortable about treating. I do think actually AHEAD 3-45 are going to be really landmark studies in Alzheimer's.

Tim Power (Head of Investor Relations)

Can we go to the next question, please, Melinda?

Operator (participant)

We wo next to Umer Raffat with Evercore ISI.

Mike DiFiore (Equity Research Analyst)

Hi, this is Mike DiFiore on for Umer. Thanks so much for taking our question. Again, I want to unlock on Leqembi. Lilly's drug did about $21 million of sales in Q1, which is its second full quarter of launch. This tracks slightly ahead of Leqembi sales at the same time point. My question is, has Biogen and Eisai perhaps paved the way for Lilly in terms of opening up healthcare infrastructure? Maybe perhaps could you speak to any competitive dynamics at play now that you're roughly 18 months into launch? Thank you.

Chris Viehbacher (CEO)

I think the answer is probably yes. Clearly, there's been a lot of hard work, particularly the IDNs, to work through all the treatment pathways and protocols and treatment regimens that are needed. Now we're into a question of lecanemab versus donanemab in those questions. As I said earlier, I think there will be cases where physicians are looking at both products. I think it'll be a question of who gets initiated. I don't think we're seeing any switching going on here. It's really a question of which one are you going to start on and then stay on. I think the bigger question is, can we actually collectively grow the market? That's really what's most important. I don't think we particularly want to get into just trying to duke it out over market share in a relatively still small market.

There are a lot of patients out there, and we are not yet doing a full service to patients who are suffering. The more that we can get more centers up and running and better education, the better it will be for patients and actually for both companies.

Tim Power (Head of Investor Relations)

Chris, let's go to the next one, please.

Operator (participant)

Next up is Terrence Flynn with Morgan Stanley.

Terence Flynn (Equity Research Pharma and Biotech Analyst)

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

Priya Singhal (EVP and Head of Development)

Yes, thank you. Overall, I'll just make a high-level statement that based on our interactions on review meetings and requests, we're not really seeing any changes at a high level. Currently, we remain on track with our engagements. With regards to Dravet syndrome, I think that obviously the data that we saw during diligence, which I spoke to as well today, for us, that has been very compelling. That has been it has several aspects to it. First of all, this population, although it was a small open-label trial, I think what was important about it was that these patients were on standard of care. Unfortunately, the burden of disease is high in Dravet, and they have a number of seizures, sometimes 7-10 a week. They are on multiple medications, anti-seizure medications.

In fact, we saw the impact of zoravonersen on top of standard of care. The impact that we saw was 87% seizure reduction on top of background standard of care, full standard of care. That was durable out to about 76% when you look out six months. The data was important. The other aspect of the question that you asked is that Stoke had already engaged with FDA, Europe, and Japan. We have regulator input, which we have evaluated carefully. We have agreement on the approach and design to the phase III EMPEROR study. We remain fairly confident that this is the right trial to conduct.

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

Chris Viehbacher (CEO)

I think to your broader question, I think certainly right now at Biogen, we have not really seen any delays in our interactions with the FDA. I personally am encouraged by some of the more recent comments by the new commissioner about particular ultra rare and thinking about surrogate markers and making sure patients get drugs earlier. I think he seems to be more interested in innovating some of the process, I think, about his statements on reducing the use of animals in studies, for example, and use of AI. There is certainly a lot of change going on at the FDA, and we're watching very carefully. Obviously, there's been some key leaders who have left and some reduction in staff. They say so far, at least from a Biogen point of view, we haven't seen any adverse effect to that.

Perhaps some of the new perspectives of the new Commissioner, Makary, could actually be helpful to us.

Tim Power (Head of Investor Relations)

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

Operator (participant)

We go next to Geoff Meacham with Citibank.

Geoff Meacham (Managing Director and Senior Pharmaceuticals and Biotechnology Analyst)

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

Operator (participant)

Yeah. We've actually recently, our main facility in Solothurn, for example, we've recently there, we're actually doing CDMO business to absorb capacity. Obviously, that doesn't help for someone looking in the U.S. In RTP, we actually do quite a lot of manufacturing already for third-party companies. I think even before I joined Biogen, I knew of the reputation of our RTP facility. It's a very high-quality, very efficient site. Yes, I think we certainly will be open and looking for opportunities on that front.

Robin Kramer (EVP and CFO)

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

Tim Power (Head of Investor Relations)

Great. Thanks for your time, everybody. Really appreciate it. If you've got more questions later today, just reach out to the IR team. Thank you.

Operator (participant)

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