Biogen - Q2 2023

Transcript

Operator (participant)

Good morning. My name is Ruth, 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. 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 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. At this time, I would now like to turn the conference over to Mr. Chuck Triano, Head of Investor Relations. Mr. Triano, you may begin your conference.

Chuck Triano (Head of Investor Relations)

Thank you, operator. 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 GAAP financial measures and a reconciliation of the GAAP to non-GAAP financial measures that we will discuss today. Our GAAP financials are provided in tables one and two, and table four includes a reconciliation of our GAAP to non-GAAP financial results. We believe non-GAAP financial results better represent the ongoing economics of our business and reflect how we manage the business internally. We have also posted slides on our website that 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 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. On today's call, I'm joined by our President and Chief Executive Officer, Chris Viehbacher, Dr. Priya Singhal, Head of Development, and our CFO, Mike McDonnell. 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.

Chris Viehbacher (President and CEO)

Thank you, Chuck. Good morning, everybody. I'd like to start off with LEQEMBI, you know, I think before we really get into all the interesting details of commercialization 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. It has received full approval from the FDA and reimbursement from CMS. There have been literally dozens of medicines that have failed before this drug ever got to market. 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. It's also gonna have a big impact on the practice of medicine.

Physicians haven't been able to really help patients very much beyond perhaps, prescribing donepezil or products like that. The treatment that we are proposing here really is going to change an awful lot of how physicians practice and treat these patients. As we start thinking about intent to prescribe and how physicians are looking at things, we're actually not gonna know that until we actually get out there in the marketplace and see how patients respond. ADUHELM did get approved, but as you all know, it never really got out of the blocks and never really got launched. 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.

I would again just call out kudos to our colleagues at Eisai. 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. This is gonna be truly a global launch. We just had the AAIC last week, and Priya will cover off a little bit more about that. You know, one of the things that's has become obvious is when we start looking at donanemab and lecanemab, these are two very different products, and I don't think most people have actually really looked at that. Most people are looking at, okay, we've got an Aβ antibody, and we're moving plaques.

There's a whole lot more to this story, and this is gonna evolve over the next months and years. These are different products. They have different mechanisms because they have different binding. They've been studied in different populations. They've been studied with different clinical study design, process, design approaches. Of course, they have a very different safety profile. All of these differences are gonna play out over in the marketplace over the coming months and years.

It'll be interesting to see how that is, I would just caution everybody as we get into this, and you see all of the data, there's an awful lot of subtlety to this, and it's gonna be quite interesting from a commercial point of view. The launch is underway in the U.S. We did get full approval 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. 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. An awful lot of change that will have to occur in the practice and their practices 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 to date. 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 very good response from commercial insurers. I think the launch of LEQEMBI is off to a very good start, and we'll, of course, keep you up to date as we get further information. I'll move on to another slide here.

One of the things that we've been doing an awful lot in the, in the past months is really making sure that we are well-positioned for growth. As we looked at the company, there'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 have actually relatively high operating expenses when we benchmark versus other companies. Part of that is an overinvestment in legacy products. We also have an extremely sense 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.

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. 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. We've been through an extensive project to really review those R&D programs. 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 want to just remove the promotional effort entirely. Biogen is still 25% market share in multiple sclerosis.

We have the highest market share by a considerable margin. There are an awful lot of patients who depend on Biogen products, but I think we can do that smarter. 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, 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, diversify into rare diseases, immunology and psychiatry. We did this redesign effort.

What we did was a bottom-up exercise to look at where do we need to be as a company to successfully launch new products? What kind of internal governance mechanisms do we want? What kind of metrics do we want? What kind of accountability? There's been a say, a complete redesign of Biogen, and that will lead some cost savings. There are gross cost savings, which will be about $1 billion in annualized savings per year. Of that, we expect to invest at least $300 million in growth opportunities going forward. This is an opportunity really to make sure in this year, before we get into the product launches, that we are truly Fit for Growth. With that, I'll turn it over to Priya.

Priya Singhal (Head of Development)

Thank you, Chris. We believe that the traditional approval of LEQEMBI 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 Eisai are continuing to generate data on LEQEMBI across the Alzheimer's disease continuum. Amyloid pathology can begin years before the onset of symptoms. There is the potential to maximize therapeutic effect of LEQEMBI by treating earlier to delay or even prevent the onset of Alzheimer's disease. Eisai and Biogen initiated the AHEAD 3-45 trial in 2020 to evaluate this approach. This consists of two sister trials in cognitively 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 LEQEMBI in the U.S., we also modified our protocol for the AHEAD trial to allow for open-label LEQEMBI rescue should patients progress to early AD while being enrolled in the trial. We believe the clinical profile of LEQEMBI 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 benefit. We are working to improve and simplify the patient journey for LEQEMBI in early AD. We have two areas of focus: a subcutaneous formulation, where the auto-injector to potentially enable at-home administration is underway. Eisai recently presented modeling data at AAIC, suggesting that subcutaneous lecanemab provides similar exposure and amyloid plaque reduction as bi-weekly IV formulation, but with the potential for lower incidence of ARIA. Regulatory filing is expected by the end of Q1, 2024.

Second is maintenance dosing, evaluating less frequent maintenance dosing in the phase II open-label extension. Regulatory filing also expected by the end of Q1, 2024. 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. 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 tau burdens that has not been collected in other phase III programs. At AAIC, Eisai presented baseline characteristics and a new analysis containing the initial results from the tau PET sub-study of Clarity AD.

In this analysis, individuals enrolled in the tau PET sub-study were categorized into high, medium, and low groups based upon tau burden measured at baseline. Lecanemab administration showed a clinical effect in the overall population of the tau PET sub-study, notably, a large effect size was also observed in the low tau population defined in this analysis, which does represent the early phase of AD. We believe this data further supports the clinical benefit observed with LEQEMBI in the broad early AD population, again emphasizes the importance of treating patients early. Biogen plans to build upon our industry-leading position in therapeutics for Aβ clearance and tau 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 tau, BIIB080, a phase II targeting antisense oligonucleotide, and BIIB113, a phase I small molecule aiming to prevent tau aggregation. Turning to SMA, the interim results from the response study were presented at the Cure SMA conference recently and highlight that most participants had investigator and caregiver-reported suboptimal clinical status across multiple domains at baseline following Zolgensma treatment. This included motor function, swallowing or feeding ability, and respiratory function. Potentially, we believe this is due to likely incomplete transduction of motor neurons following gene therapy administration. The interim results at six months show 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. Overall, we believe these results suggest that there may be potential for additional benefit with SPINRAZA treatment following Zolgensma treat administration.

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

BIIB080, a phase II tau targeting ASO, which has phase Ib data, showing a time and dose-dependent reduction in CSF total tau and phospho-tau, as well as tau tangles visualized via tau PET. Litifilimab, a subcutaneous anti-BDCA2 antibody currently being evaluated in two phase III studies in systemic lupus erythematosus and a phase II/III study in cutaneous lupus erythematosus. BIIB105, an ATXN2 ASO, being evaluated in a phase I/II study in broad sporadic ALS. We expect a readout midyear 2024. BIIB122, a LRRK2 ASO being developed in partnership with Denali Therapeutics, currently in a phase IIb study for idiopathic Parkinson's disease. BIIB121, an ASO aiming to increase the expression of paternal UBE3A in Angelman syndrome, and we expect the phase I to read out midyear 2024.

In summary, this past quarter, we continued to make significant advancements across our pipeline, most notably with the traditional approval of LEQEMBI in early AD. 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.

Mike McDonnell (CFO)

Thank you, Priya. Good morning, everyone. I'll provide some highlights and color regarding our financial performance for the second quarter. 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. That's a decrease of 5% at actual currency and 3% at constant currency. Non-GAAP diluted earnings per share in the second quarter was $4.02. Total MS products revenue was $1.2 billion. That's a decrease of 15% at actual currency and 14% at constant currency. A few recent updates to the MS business this quarter. First, the decline in MS in the second quarter was attributable to generic entrants for TECFIDERA 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, TECFIDERA's regulatory market protection in the EU was extended by one additional year until February 2nd, 2025. Some of the TECFIDERA generics have not yet fully exited some of the EU markets, some generic products remain in the channel. The pace of generic withdrawal has been slower than we expected, we're closely monitoring this situation and working to enforce our legal right to market protection. 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. While we have not seen any biosimilar launches so far, we could see an approval and launch in the coming months. Moving on now to SMA. Global SPINRAZA revenue of $437 million increased 1% at actual currency and 5% at constant currency. SPINRAZA growth in the U.S. was 12%. That was driven by patient growth. We were encouraged by the performance this past quarter. We believe we are making good progress against our goal of returning SPINRAZA to consistent growth. Also, as Priya mentioned, we are continuing to generate data to support the efficacy profile of SPINRAZA. We believe that this, along with the expected overall market expansion, should help enable continued improved performance for SPINRAZA.

Biosimilars revenue of $195 million was flat at actual currency and increased 4% at constant currency. We are continuing to manage supply constraints for IMRALDI and BENEPALI 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. 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 ADUHELM and the LEQEMBI collaboration, equated to a headwind of $20 million to revenue during the second quarter. As a reminder, LEQEMBI revenue represents our 50% of in-market revenue, less 50% of commercialization expenses. We expect this line to continue to be negative in 2023, as the ramping of LEQEMBI 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. As a reminder, starting this quarter, our pre-tax profit share on RITUXAN, GAZYVA, and LUNSUMIO decreased from 37.5% to 35%, and that's due to the achievement of certain sales targets for GAZYVA as part of our contractual agreement with Genentech. 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-GAAP cost of sales was 24% of total revenue, and that includes $34 million of idle capacity charges.

We continue to see higher cost of sales as a % of revenue as a result of product mix and idle capacity charges, in particular, the increases that we are seeing in contract manufacturing revenue increases our overall cost of sales as a percentage of revenue. 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. Second quarter non-GAAP R&D expense includes roughly $13 million in estimated study closeout costs related to BIIB093. 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. 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 initiative. 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. A substantial portion of the $700 million of net annual OpEx savings are expected to come from a net headcount reduction of approximately 1,000, which we expect to rightsize 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 annualized basis. We believe that this is an efficient program, with 70% of our expected gross OpEx savings to be realized as net savings. All in, we expect a very modest impact on 2023 expenses and believe the net OpEx savings will be split roughly equally between 2024 and 2025. 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. We continue to generate steady, positive cash flow from operations, with free cash flow of $416 million during the second quarter. 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, and today we are reaffirming our full year guidance of a full year 2023 revenue decline in the mid-single-digit % range as compared to 2022 reported results, and full year 2023 non-GAAP diluted earnings per share of between $15 and $16. You can refer to our press release for other important guidance assumptions. Now I'll turn it back over to Chris for a few closing comments.

Chris Viehbacher (President and CEO)

Thank you, Mike. Well, in addition to reengineering our cost base, we're actually also reengineering the marketed portfolio of products. We've already had two approvals this year with SKYCLARYS and LEQEMBI 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 3rd quarter, by the EMA in Europe, in the 1st quarter of next year. In the 1st quarter of next year, also in China. We also are expecting a decision by the FDA on aducanumab, actually next week, potentially. Then we also are continuing to evolve the LEQEMBI.

As Priya said, we are expecting to be able to submit the regulatory dossiers for LEQEMBI subQ in Q1 of next year, and also a regulatory filing for maintenance dosing next year. 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. As I have said before, this is an opportunity to expand the portfolio more into rare diseases, into immunology and neuropsychiatry. With that, Chuck, we'll turn it back and invite questions.

Chuck Triano (Head of Investor Relations)

Thanks, Chris. Operator, can we please poll for questions?

Operator (participant)

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 one again to rejoin the queue. Your first question comes from the line of Brian Abrahams with RBC Capital Markets.

Brian Abrahams (Managing Director and Global Sector Head of Healthcare Research)

Hey, good morning, guys. Thanks so much for taking my question, congrats on all the developments. We recently saw some competitor data at a medical conference, 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 profiles? 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 to your overall launch strategy? Thanks.

Chris Viehbacher (President and CEO)

Thanks for the question, Brian. You know, this is going to be super interesting from a, 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 there's two Aβ antibodies here, and they remove plaque, and that's it. The story is actually a whole lot more complex. You know, first, I would say, these are two products with that really go after the problem in a different way. 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 Aβ. Lecanemab goes after those, whereas donanemab doesn't.

These are the soluble forms. 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. These soluble forms, 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. There's also, you know, a difference in how these patients were studied. First, a much different patient populations. Lecanemab was studied actually in an earlier patient population. Roughly, 2/3 were in MCI and 1/3 in mild, and then donanemab was the reverse.

This is important because there's different rates of progression amongst these patients. Actually, when Priya talked about these low tau, which, you know, have no overlap with the low tau, low to medium tau, that donanemab studied, these are patients that would really progress quite slowly. To actually see an effect like that, I think really speaks to the efficacy of this product. There's also all the different endpoints. You know, Lilly measured their primary endpoint on a Lilly-designed endpoint. Lecanemab used the gold standard, which is the CDR sum of boxes.

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. Of course, safety will be a big issue. You know, remember, most neurologists, if they've seen ARIA before, it's been pretty rare. I mean, we do know that ARIA can occur even in the placebo group, but it's not something they'll have seen very often. This is gonna be a different thing for them, first to think about monitoring for safety with the MRIs. 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 ARIA. I think the safety benefit of lecanemab will be quite important to physicians as we go forward. There are a number of dimensions here that I think will be developed over time. There's gonna be all the different blood diagnostics that come along. You know, personally, my belief is that we're gonna be seeing treatment progressively over the years in earlier patients before too much neuronal death has occurred. Of course, that's where LEQEMBI's benefit will arise, where they have already studied much more of these patients.

You know, generally, I would say, you know, Lilly has been focused on looking at subpopulations, trying to say, "Okay, in this subpopulation, we've got this result, in that subpopulation." 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. I think that's where LEQEMBI will also demonstrate its benefits. It's gonna be quite interesting. There's lots of data here to pore over that's come out of the AAIC, a lot of that will just become much more tangible over the coming months and years.

Chuck Triano (Head of Investor Relations)

Thanks, Chris. Can we poll for our next question, please?

Operator (participant)

Our next question comes from the line of Marc Goodman with Leerink Partners.

Marc Goodman (Senior Research Analyst of Neuroscience and Ophthalmology)

Yes, good morning. Mike, just to make sure we're all aligned here with the numbers and the cost savings. OpEx $4.5 billion for 2023, so we should be thinking $3.8 billion in 2025. How do we get there with respect to SG&A and R&D? Are they about even? To help us think about how the P&L is gonna look. Thanks.

Mike McDonnell (CFO)

Yeah, Marc, thanks for the question. Your math is correct. Our goal would be to achieve a full run rate of the $700 million net savings in 2025. On an OpEx base of four and a half, 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. The overall savings will be a mix.

You know, we're not providing, you know, full granularity on whether, you know, R&D will be plus or minus the $2 billion number that you threw out. You know, 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. Ultimately, you know, the savings will come from both sides. The gross margins, that's a trend that we expect will continue, at least for the near term. When you look at the product mix, we obviously have, you know, continuing declines in the 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.

We do expect to see, our cost of sales as a percentage of revenue, at least for the near term, to be a bit lower than what we've. 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. Then over time, as, you know, LEQEMBI becomes profitable and ramps up, we should hopefully see some recovery up on the gross margin line.

Chuck Triano (Head of Investor Relations)

Thanks, Mike. Can we go to our next question, please?

Operator (participant)

Our next question comes from the line of Robyn Karnauskas with Truist.

Robyn Karnauskas (Managing Director and Senior Biotech Analyst)

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 interest in using drug and coordinating that. Can you give us more details as to how laborious and how easy the CMS registry, now that it's up and running, is, and what questions they're asking? Thanks.

Chris Viehbacher (President and CEO)

I think first on the registry, all the feedback is this is manageable. I think everybody would prefer not to have a registry, but, you know, personally been on it. There's drop-down menus. Most of the data are available from the medical record, so, we think 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. You know, I think where we are now, the one PET scan that is included should not be a barrier. You know, I think, I think there's just a, you know, the mechanics actually of seeing patients that will change.

You know, there's gonna be a need to do more of the cognitive testing, getting the PET scan or the lumbar puncture, figuring out where to go with the MRI infusion centers, and then getting the three MRIs. 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 LEQEMBI during the period before full traditional approval. 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 play out. I think there's been an awful lot of wait and see amongst the, some of the medical community. Are we really gonna get full approval? Are we really gonna get CMS approval? I think now that that is in place, which is, you know, as I said before, I think is a really seminal moment in healthcare, you know, we'll see the practicalities of this. 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 leader professionals. There are gonna 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. It is not clearly as simple as just prescribing a pill and going down to your local pharmacy.

Chuck Triano (Head of Investor Relations)

Thanks, Chris. Next question, please, operator.

Operator (participant)

Your next question comes from the line of Mohit Bansal with Wells Fargo.

Mohit Bansal (Managing Director and Co-Head of Therapeutics Research)

Great. Thank you very much for taking my question, and maybe a question for Priya. When you think about subcutaneous LEQEMBI, and we'll see the data later this year, but how do you think about positioning it? Do you think it is more of a maintenance treatment after the IV LEQEMBI versus an induction kind of treatment? How important is CMAC to get an induction approval here? Super helpful. Thank you.

Priya Singhal (Head of Development)

Thank you, Mohit. It's a great question. I think maybe before I answer that, I'll just say that Biogen and Eisai are really looking to simplify and improve the patient journey, and this is a multipronged effort. One is subcutaneous formulation, which, you know, can address the infusion capacity and other issues. There's potential for an auto-injector and self-administration at home. The second is, you know, really thinking about how LEQEMBI can be positioned to really address the long-term duration question that is still out there. The good news here is that LEQEMBI does have the opportunity to be used, you know, with a long duration, and the question is: What is the right maintenance duration for this therapy?

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 mg administered weekly, instead of the intravenous biweekly therapy. The important thing here to understand is that really it is the hope and the data kind of point to the fact that safety could actually be better with the subcutaneous formulation. You know, we might have lower rates of ARIA, and the filing is expected to be complete by Q1 2024. I also expect that more data, Eisai has communicated this, will be released at CTAD this year. I think, you know, let's wait for more of that data, which is, I think, forthcoming, and we look forward to the, you know, hopefully simplifying the patient journey.

Chuck Triano (Head of Investor Relations)

Thanks, Priya. Next question, please.

Operator (participant)

We'll go next to Umer Raffat with Evercore.

Umer Raffat (Senior Managing Director)

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. Chris, this one is for you specifically. 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? Second, what was your thought process in deciding whether or not you needed to put out any disclosures?

Chris Viehbacher (President and CEO)

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. Anybody who knows anything about boards knows that you only make significant changes to the board through a consensus of the board. A board is a college of peers with equal power. You know, there had 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.

The board actually said: "Well, we need to think about governance, and are we changing as well?" I can tell you that all of the discussion, to which I was a party, all concerned one thing, and that is what is right for Biogen. I found that very encouraging. You know, we have a new chair, and I have to say I couldn't be happier working with Caroline. 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 foursquare 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.

We don't look at their personal relationships. 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, that needs to be said about that.

Chuck Triano (Head of Investor Relations)

Thank you, Chris. Can we move to our next question, please?

Operator (participant)

Yes, sir. We have a question from Salveen Richter with Goldman Sachs.

Salveen Richter (Lead Analyst for the U.S. Biotechnology Sector)

Thank you. Good morning. How has the Fit for Growth and your cost alignment work influenced your thoughts on M&A and BD? You've noted the three disease areas, but can you just provide some thoughts on the value proposition across the areas, any limits with regard to size of a deal and the use of equity? Thank you.

Chris Viehbacher (President and CEO)

Well, Fit for Growth, remember, is really reflecting 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. 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 and. You know, you have to think about the short term and the long term. One of the things is you have to be cost efficient, and you have to invest for growth.

That's been a very tricky exercise. 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 is the best way to position Biogen going forward? That's why we didn't start with where we were, but we started with where we want to be. What is that organization? How many people? We've benchmarked the organization. We've looked at the making sure we have enough investment in the product launches, have enough investment in those exciting R&D projects that we really want to focus on, and then work backwards from there. I think the company is well positioned now to be oriented towards growth while also managing our historic portfolio.

Again, I come back to saying we are still the market leaders in MS, and we have an obligation to both physicians and their patients on that. So we will be changing the way we the promotional mix, but we're not going to just walk away from that either. I think in terms of M&A and external growth is really, you know, what do we do to build on that? That starts with BD in an earlier stage of the pipeline. Are there things that we want to build on to that?

In particular, as I've said in the past, I think, you know, we're proud of our position in neuroscience, but neurological conditions are slow-progressing diseases and really require very expensive, long trials. They're ones where you can't really de-risk them with a phase II asset. We're not gonna 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. I think we can do that with the rare diseases, with, you know, more of a focus on immunology. If, you know, we've never been very far from immunology in the history of the company.

Of course, we already are in neuropsychiatry, and can we build that portfolio? 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. In all of those things, when you're dealing with partners and you're dealing with business development, you want to have that nimbleness, that ability to be agile. I think Fit for Growth will actually facilitate that. Really, the approach to external growth is more strategic in how we shape the portfolio of the company.

Chuck Triano (Head of Investor Relations)

Limits to size or use of equity is part of the question, Chris?

Chris Viehbacher (President and CEO)

You know, I think we're really looking at what really makes sense for the company. You know, I don't think we've seen anything that would require use of equity. You know, Mike, we've got, I think, about $7.3 billion in cash, so, you know, as far as I'm concerned, 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, 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. That part is a cultural shift that's coming out of that. I think that'll affect how we think about business development as well.

Chuck Triano (Head of Investor Relations)

Great. Next question, please.

Operator (participant)

We'll go next to Michael Yee with Jefferies.

Michael Yee (Managing Director and Senior Biotechnology Analyst)

Hey, guys. Thank you. Just wanted to ask on the zuranolone program. Obviously, you have the PDUFA date coming up. Chris, you've made some pretty bullish comments on this before, and maybe rightsize your expectations about how to think about that opportunity and whether there could be a split label. Importantly, since you're talking about cost cutting, how a positive approval or maybe some various form of two different indications could impact expenses going forward. Just talk a little bit about zuranolone. Thank you.

Chris Viehbacher (President and CEO)

Yeah, well, we, you know, we have a PDUFA date, on August 5th, you know, we'll be able to give you a full update once we've had the FDA decision. I, you know, and I, and I don't really want to talk about that process right now. You know, I'll just say that, you know, there is an enormous unmet need in mental health, and that only seems to be rising. You, 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. You know, one of the things is that the pandemic did was, I think, really bring this more out into the open where it belongs.

Certainly PPD is a huge unmet need, massive taboo around that, you know, that will be quite a heavy lift, actually, because it's not really... There isn't really a clarity around who really is responsible for diagnosing and treating, you know, mothers at that point. You know, we look forward to being able to hopefully contribute to that. There is a significant unmet 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, could be of great value to patients.

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.

Chuck Triano (Head of Investor Relations)

Thanks, Chris. Can we move to our next question, please?

Operator (participant)

Yes. Our next question comes from Tim Anderson with Wolfe Research.

Tim Anderson (Managing Director and Senior Equity Research Analyst of Pharmaceuticals & Biotechnology)

Thank you. I know that Biogen and Eisai continue to talk up the need to dose Alzheimer's drugs or LEQEMBI specifically chronically and not just for a finite period, and you're talking about protofibrils and how they're the most neurotoxic species and that sort of thing. From what I understand, you know, the science is really thin that says you need to dose chronically, and that soluble forms of Aβ really make a difference in terms of continued disease progression. Empirically, if we just look at what came out of AAIC, we see a similar level of reduction and improvement in cognition with finite dosing with donanemab, and we see continued curve separation with Lilly's product and your product. Doesn't that potentially call into question the need for chronic dosing?

Isn't that possibly a risk with LEQEMBI, that docs actually only use it until plaque is cleared, and then they stop, which would lead to a very different revenue opportunity, for LEQEMBI? Thank you.

Chuck Triano (Head of Investor Relations)

Dr. Singhal?

Priya Singhal (Head of Development)

Thank you for the question. Yes, this is a very important area of query and scientific hypothesis. Maybe before I really talk about LEQEMBI or donanemab, we can agree that Alzheimer's disease is really a progressive and eventually fatal condition with, you know, obviously neurodegeneration involved along the way. What we've seen with LEQEMBI and actually multiple lines of evidence outside of LEQEMBI, also with aducanumab in the past, is that when you clear plaque, it does not reaccumulate that easily. What you do see is progression of disease, and you see an impact on the fluid biomarkers. With LEQEMBI and with the gap period that we had in phase II, we saw an increasing, you know, a reversal of the Aβ42/40 ratio, implying that disease continued to progress.

We saw very similar evidence with aducanumab, and I think what we see now with the plasma p-tau levels, in the past, we saw with aducanumab sort of decreasing with the EMERGE dataset, and with LEQEMBI, what we've seen with p-tau181, is a stabilization. Actually, if you saw the donanemab data on P217, which was the plasma tau biomarker they used, and these track really quite closely, is that you see a slight increase. I think we still need to understand, with more data transparency, the donanemab data of what really happens to patients who stopped at six months or stopped at one year. We hope we'll see more of that data from their open-label extension and, you know, be able to draw conclusions.

When you look at the substrate for donanemab, it really does not make sense to continue to dose. One, because of substrate exhaustion, and two, because of the presence of anti-drug antibodies, close to about 84%-87%. Whereas with LEQEMBI, you have the opportunity to have an individualized treatment duration discussion between the patient and the doctor, because actually it continues to impact soluble substrate, as Chris mentioned. We are going to be generating data to actually look at this in a very systematic way with the phase II open label extension. 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. That's where I'll leave it. Thank you.

Chris Viehbacher (President and CEO)

Thanks, Priya. Next question, please, operator.

Operator (participant)

Yes, sir. We'll go next to Evan Seigerman with BMO.

Evan Seigerman (Managing Director, Head of Healthcare Research, and Senior Biotechnology & BioPharmaceutical Analyst)

Hi, guys. Thank you so much for taking my question. Now that you've talked through some of the right-sizing that you plan on doing, and now you're focusing on BD on 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? Are you focused on really near-term revenue opportunities to grow the business or other stage development items? Thank you.

Chris Viehbacher (President and CEO)

Well, you know, it's quite interesting. I, you say today, when I talk to bankers, it's interesting. I think if you've got something that has really good data, that there tends to be a price for that, and that price is more or less constant. You know, I was asking bankers, "You know, do you think Merck would have had to pay even more for Prometheus, for instance, two, three year, two years ago, in, you know, when, it's kind of the go-go days of biotech?" Their view was no. I think if you find quality assets out there, and you know, 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, that's what really sort of says, well, are things relatively expensive or not? As a company, I think, you know, I always like to say, our investors to make them rich and not someone else's shareholders. 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. We all know that a lot of BD doesn't do that. You know, the way I look at Biogen, we've got, had now the decision on LEQEMBI. We have a pending decision at the FDA for zuranolone. We've got pending decisions for LEQEMBI 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. You know, we have, I think, some super interesting products in our research and development pipeline that Priya mentioned. If you look at it, you know, we already have a value creation story. Anything that we're going to do has to be accretive to that picture. You do have to go look, and you're going to have to go 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 the, you lose your objectivity. I can tell you that we are laser-focused on 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. 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.

Chuck Triano (Head of Investor Relations)

Thanks for the views, Chris. Next question, please.

Operator (participant)

The next question comes from Ami Fadia with Needham.

Ami Fadia (Senior Analyst)

Hi, good morning. Thank you for taking my question. Maybe a bit of a follow-up on the last topic. You know, it sounds like, you know, in the context of the Fit for Growth initiative, does it mean that from a BD perspective, you're unlikely to do a deal that's a significant lift from an R&D perspective over the next couple of years? Also, if you could provide some color on how you anticipate growth margin to evolve between 2023 and 2025, that would be helpful. Thank you.

Chris Viehbacher (President and CEO)

I missed part of that sentence about. Does that mean on the BD that we would not do something?

Ami Fadia (Senior Analyst)

Oh.

Chris Viehbacher (President and CEO)

Could you repeat the question?

Ami Fadia (Senior Analyst)

Sure. Does it mean that you would not-?

Chris Viehbacher (President and CEO)

The first one.

Ami Fadia (Senior Analyst)

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?

Chris Viehbacher (President and CEO)

Well, I think we have enough heavy lifts in R&D, to be honest. I'm certainly looking at things that, you know, to me, it's less around the expenditure as how much risk you're taking. What I, you know, what I find hard is when we have a, you know, a multi-year, five-year type, phase III study that's essentially a proof of concept. That's, I think, what we're really trying to move away from. What I would say, though, is, you know, we are clearly benchmarking. I, you know, I really want us to be rigorous on G&A. I want us to be competitive, on the sales and marketing. On R&D, I want us to be super disciplined on capital.

I would say, you know, all the benchmarking we've done is that Biogen has actually been better than average on productivity. I do believe greatly in a lot of the capability within Biogen. I do think if there are things that really make sense, I actually have a higher degree of trust in our R&D organization that 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. The problem in a lot of organizations is we fall in love with something.

The data aren't quite clear, you know, we'll go and keep going because we have it. I think the discipline to kill stuff that doesn't meet its milestones is probably more important than anything else to managing R&D investments. That's why I'm grateful to have Priya, because I think Priya is extremely objective on this. We all are. 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. You know, we're going to be extremely tough on what it is that we're going to choose to develop.

Mike McDonnell (CFO)

Maybe, Ami, 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, and that's pretty heavily tied to the outsized contract manufacturing revenue that we're seeing this year. 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 anti-CD20s, which are highly profitable. They're kinda flat to, you know, somewhat declining, has kind of been the trend there. You've got, you know, TECFIDERA, where you've got generic competition in the U.S.

We do have legal protection through the early part of 2025, that's a high-margin product, as you know. You know, when you look at the growth trajectory of those products versus the contract manufacturing, 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 know, you would expect that we would continue to see some pressure on the gross margin percentage. That's something that we'll manage. We did have $34 million of idle capacity charges during the quarter. That is something that we hope will abate over time as LEQEMBI ramps up, and we're able to fully utilize our facility in Solothurn.

That would be potentially an offset. You know, we don't see, you know, real material increases in our gross margin percentage, so that's something we're going to have to manage. 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.

Chris Viehbacher (President and CEO)

Great. Thanks, Mike. Next question, please.

Operator (participant)

We'll go next to Brian Skorney with Baird.

Brian Skorney (Senior Research Analyst of Biotechnology)

Hey, good morning, everyone. Thank you for taking my questions. Really just had one. You guys had a role in developing both LEQEMBI and ADUHELM, and one of the things that seems to be jumping out is sort of the differential profile of these drugs in terms of ARIA rates. Seeing that, those differences despite very similar plaque removal, I guess, you know, there's a lot of speculation and maybe remains a lot of uncertainty as to the underlying mechanism. Anything you can say in terms of sort of your thought process about how much of this may be sort of subspecies, target-driven, how much of it may just be sort of a matter of PK? I mean, it seems like the comments on sub two indicates at least some of it may be Cmax driven.

just how are you guys currently thinking about the mechanism underpinning the ARIA?

Priya Singhal (Head of Development)

Yes. Thank you, Brian. Overall, I think, you know, we don't fully understand the mechanism of ARIA, but the data have been replicated for LEQEMBI in terms of a low incidence of ARIA, in the sense that when you compare it with some of the other anti-amyloid beta antibodies, it is significantly lower and replicated twice. For example, in the Clarity AD study, we had an ARIA-E rate of about 12.6%, but with donanemab, we see an ARIA-E rate of 24%, and very similar sort of proportions with ARIA-H. I think that it also depends on the population that has been recruited, and as Chris mentioned, you know, these populations have been slightly different, with MCI, being and the early population, because we really believe that patients need to be treated earlier.

That could be playing a role. I think overall, it's very hard to assess exactly what may be driving the differential rates. What I think we can say is that the observation that the incidence is significantly different, and therefore, I believe that the benefit risk is also different. That, I think, is what doctors should be looking at. Couple that with the efforts that, you know, we do have a very clear window of susceptibility with ARIA and LEQEMBI that we see. 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 teeters off completely. 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 Eisai with their understanding ARIA program. 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 tau sub-stratification for LEQEMBI, and we have the results right up to tau PET, because everybody, you know, as you know, amyloid kind of progresses into the neurofibrillary tangles. It's really helpful to understand that there is a broad application with LEQEMBI, and then there's a risk profile that's also in the broader population.

I think we do have a box warning, as you know, with the, you know, APOE4 patients who do have a higher rate of ARIA, and this again, is really what we see across the different molecules.

Chris Viehbacher (President and CEO)

You know, and one of the things, Priya, that I was. Lynn Kramer and Priya over the weekend, got to this super interesting paper about all that happened at AAIC and the differences. 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.

Priya Singhal (Head of Development)

Yes.

Chris Viehbacher (President and CEO)

I mean.

Priya Singhal (Head of Development)

Every subgroup.

Chris Viehbacher (President and CEO)

You're looking at the APOE group, heterozygous, homozygous, there's a difference. 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 ratio on the safety. That's why I think, you know, we're gonna 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, this is gonna generate an awful lot of research, and we're gonna start digging into this and understanding all of these different subtleties that are there. I think these differences are gonna be quite important.

As Priya said, we're, the jury's still out on that, but we have an awful lot of signs about what's really going on here. That's why, as a company of Biogen, you know, we don't see the launch of LEQEMBI as the end to our commitment to Alzheimer's. As Priya pointed out, we have other programs in Alzheimer's, and we're gonna be continuing to do research because it is really our ambition to be, along with our partners, Eisai, the absolute leader in what we think is gonna be an extremely significant market.

Chuck Triano (Head of Investor Relations)

Great, thank you for the insights. Next question, please.

Operator (participant)

Next question comes from Chris Schott with JPMorgan.

Chris Schott (Managing Director)

Great. Thanks very much for the question. I appreciate all the color on the call, but I just wanted to come back to the LEQEMBI 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 of that, is this either going faster or slower than you might have anticipated? Maybe just as part of that, what 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, how to think about these next few quarters and years from here? Thanks so much.

Chris Viehbacher (President and CEO)

Well, as to what you anticipate, it's kinda 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. When you think about Alzheimer's patients and visiting neurologists, you know, beyond cognitive tests, and as I say, perhaps prescribing, you know, the anticholinergics like donepezil, hasn't really been much to do. Now we do have a treatment, and this is gonna upend a lot of the processes within neurology practices. It's extremely exciting, but, you know, really, the uptake is geared on how prepared are the sites? This is variable around the country. 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 wait-and-see mode, but I think are all ramping up. One of the things that we have been doing is really trying to figure out where are the sites that are really ready 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. It all depends on really how advanced the sites are, how ready they are, that is really gonna define the uptake.

And that's why we have to target our resources to that and really assess the site activation, if you like. So far, we're getting a lot of positive feedback. Physicians are getting a lot of inquiries from patients. I think they will have to figure out exactly what's 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, you know, what we've been talking about in terms of these protofibrils, about the different patient populations. All of those things are gonna engage the whole neurology community here.

I, you know, so far, you know, everything is, as far as we're concerned, the launch is going to plan.

Chuck Triano (Head of Investor Relations)

Thanks, Chris. If we could just take our last question, operator.

Operator (participant)

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

Paul Matteis (Managing Director and Head of Therapeutics Research)

Hey, thanks so much for taking my question. I wanted to just briefly come back to zuranolone. I've been really surprised by the lack of discussion on the call, in the prepared remarks compared to prior calls. Can you just am I overly reading into this? I guess you're gearing up for potentially a new antidepressant approval. Chris, at one point, you called this your most undervalued asset. Are you as bullish on this drug as you were before? I guess if you didn't get the MDD approval but only got PPD, you know, how would Biogen execute on that opportunity? Thank you.

Chris Viehbacher (President and CEO)

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

Chuck Triano (Head of Investor Relations)

All right. Thanks, Chris.

Priya Singhal (Head of Development)

Thank you.

Chuck Triano (Head of Investor Relations)

Thanks to everybody today for joining.

Operator (participant)

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