Biogen Q3 2021 Earnings Call Transcript

Quartr
Provided by Quartr
October 19, 2021

Key Takeaways

  • Biogen reported Q3 2021 revenue of $2.8 billion (–18% YoY) and non-GAAP EPS of $4.77, raising full-year revenue guidance to $10.8–10.9 billion and EPS to $18.85–19.35.
  • The US launch of Aduhelm has been slower than anticipated due to Medicare’s pending National Coverage Determination, complex reimbursement and infrastructure bottlenecks, although Biogen maintains confidence in its long-term potential and is advancing data publications and a Phase 4 confirmatory study.
  • Biogen’s pipeline advanced with Eisai initiating a rolling submission for lecanumab, positive Phase 2 data for zuranolone in major depressive disorder (NDA planned H2 2022), and encouraging biomarker signals for tofersen in SOD1-ALS despite missing its primary endpoint.
  • The company strengthened diagnostic and treatment infrastructure—expanding CSF testing through LabCorp and Mayo Clinics, advocating for amyloid PET reimbursement, and activating ~120 Aduhelm infusion sites—and expects an NCD draft decision in January and final in April 2022.
  • Despite generic challenges to Tecfidera and Rituxan, Biogen ended Q3 with $3.9 billion in cash and marketable securities, repurchased $750 million of stock, and reaffirmed its strategy to support free cash flow and long-term growth.
AI Generated. May Contain Errors.
Earnings Conference Call
Biogen Q3 2021
00:00 / 00:00

There are 14 speakers on the call.

Operator

And financial update. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. I would like to now turn the conference over to Mr.

Operator

Mike Henke, Investor Relations. Mr. Henke, you may begin.

Speaker 1

Good morning, and welcome to Biogen's Q3 2021 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 12 and Table 4 includes a reconciliation of our GAAP to non GAAP financial results. We believe non GAAP financial results better represent the ongoing economics of our business and reflect how we manage the business internally. We have also posted slides on our website that follow the discussions related to this call.

Speaker 1

I would like to point out that we will be making forward looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. Today, we will be discussing Aduhelm. Aduhelm is indicated for the treatment of Alzheimer's disease.

Speaker 1

Treatment with Aduhelm should be initiated in patients with mild cognitive impairment Or mild dementia stage of disease, the population in which treatment was initiated in clinical trials. There are no safety or effectiveness data on treating treatment at earlier or later stages of the disease than were studied. This indication is approved under accelerated approval Based on reduction in amyloid beta plaques observed in patients treated with Aduhelm. Continued approval for this indication Maybe contingent upon verification of clinical benefit in a confirmatory trial or trials. Aptelm can cause serious side effects, Including amyloid related imaging abnormalities or ARIA.

Speaker 1

ARIA is a common side effect that does not usually cause any symptoms, but can be serious. Aduhelm can cause serious allergic reactions. The most common side effects include ARIA, headache and fall. Please see full prescribing information and patient medication guide ataduhelm.com. On today's call, I am joined by our Chief Executive Officer, Michelle Vuonazos Doctor.

Speaker 1

Al Sandrock, Head of Research and Development and our CFO, Mike McDonnell. We will also be joined for the Q and A portion of our call by Alicia Limo, President of our U. S. Organization and Toby Ferguson, Head of Neuromuscular Development. As a reminder, during the Q and A portion of the call, we kindly ask that you limit yourself to one question.

Speaker 1

I will now turn the call over to Michel.

Speaker 2

Good morning, everyone, and thank you for joining us. We continue to view 2021 as a transformational year for our company. We are satisfied with our 2021 pipeline accomplishments and the continued operational performance of the company. However, we are obviously disappointed with the delayed uptake of AdvoHealth in the U. S.

Speaker 2

We had solid financial results for the Q3 with total revenue of $2,800,000,000 and non GAAP EPS of $4.77 Biogen has continued to execute well and demonstrate resilience Across MS, SMA and biosimilars despite competition. Mike will provide more details on our financial results And I will focus primarily on Abihelme. We continue to believe in Abihelme long term potential. And this quarter, we continued to progress the launch in the U. S.

Speaker 2

In anticipation of the reimbursement decision for Medicare patients. We are working through the 3 near term challenges we have previously described with a core focus on enabling patients' access. Importantly, we have made steady progress on key metrics, but the healthcare system remains a major bottleneck. In particular, the lack of clarity on reimbursement has delayed patient access to the first treatment To address an underlying pathology of Alzheimer's disease, which is reasonably likely to predict clinical benefit. We look forward to the upcoming Medicare National Coverage determination expected by next April, We should clarify Medicare reimbursement for the entire class of antibodies directed against amyloid.

Speaker 2

The NCD is a rigorous process involving a number of consultation and we understand this is required for this new class of drugs for Alzheimer's. However, keep in mind, this will delay access for many patients by approximately 300 days From approval, Biogen is acting with urgency across the 3 strategic priorities As we work to support access for patients. First, we are working to improve the community's understanding of our clinical data. As a reminder, the Phase 3 EMERGE study met its pre specified primary and secondary endpoints, Showing a significant reduction in clinical decline. Patients who receive high dose at the helm experience significant benefits on measure of cognition and function including activities of daily living.

Speaker 2

Although the other Phase 3 Study ENGAGE did not meet its primary endpoint analysis for both studies demonstrated that higher exposure to Abihelme We're associated with greater reduction in clinical decline. We have submitted these Phase III results To a top tier journal with a manuscript now under peer review in addition to all the publication on our data. And we will continue to generate additional data. We launched EyeCare AD, the first real world observational Phase 4 study in Alzheimer's disease Designed to evaluate the safety and effectiveness of AJALM in clinical practice. We have submitted A draft protocol to the FDA for the required Phase 4 confirmatory study.

Speaker 2

We have fully resourced this study with the goal of completing it ahead of schedule. In addition to presenting at your helm data at this year's C meeting, the EMBARK baseline data have been accepted for presentation at next month's CTAB meeting, which will provide important information regarding the impact of a gap in treatment. Furthermore, We also plan to present important new plasma phosphorylated tau data from EMERGE and ENGAGE That highlights the downstream effect of aducanumab as soon as possible. Overall, The approval of Aduhelm was supported by a significant data set from 8 studies with more than 3,000 patients And we look forward to continuing to generate additional data to support the clinical profile of Aduhelm. Our second priority is to appropriately support development of the necessary infrastructure.

Speaker 2

At launch, We established a program with LabCorp and Mayo Clinic Laboratories for amyloid beta CSF testing. Throughout the quarter, we saw a continuous increase in the number of patients utilizing this program. We also continue to advocate for reimbursement of Amyloid PET imaging. Furthermore, We are continuing to see additional sites come online with approximately 120 sites Now treating patients with Aduhelm and many more sites in progress. And third, to clarify reimbursement as we wait the NCD decision for this class of antibodies, We have obtained the permanent Abuhail J code becoming active in January of next year and hope this will help simplify The coding process for healthcare providers.

Speaker 2

Looking forward, in addition to presenting and publishing the data that I previously mentioned, The most significant Neutom milestone will be the outcome of the NCD for antibodies directed against amyloid. We expect a draft decision in January, following by a final decision in April of 2022. In Alzheimer's, more broadly, our partner, SI, recently initiated the FDA rolling submission for nikanimab BLA Under the accelerated approval pathway following the receipt of breakthrough therapy designation in the U. S. Of the anti amyloid antibodies that are either approved or in late stage development, Biogen and Eisai Have the opportunity to provide patients with 2 out of the 4 potential options.

Speaker 2

With the 1st FDA approved therapy to address an underlying pathology of Alzheimer's disease, The potential to bring lekanimab from missing tau pipeline programs such as BIIB080 And with the benefit of digital technologies, we believe Biogen is well positioned to remain long term leader in Alzheimer's disease. Moving beyond Alzheimer's disease together with our partners at Sage, we continue To make progress towards bringing a potential novel therapeutic options to patients suffering from depression, We recently obtained positive data from a Phase 2 study in Japan, representing the 3rd positive placebo controlled Lastly, we recently reported data from the VALOR Phase 3 study of tocarcinib in ALS. Although the VALOR Did not meet the primary endpoint, signs of reduced disease progression across multiple endpoints were observed. We are encouraged by the totality of the evidence and are engaged with regulators on next steps. Following discussion with investigators, bioethicists and having listened to the voice of patient advocacy groups, We intend to expand the early access program to the broader population of individuals living with SOD1 ALS.

Speaker 2

We believe these recent developments represent a significant step forward in our goal of transforming Biogen From what was once an MS company to one that is built upon a multi franchise portfolio across a broad Spectrum of Neuroscience Therapeutic Careals. I would now like to turn the call over to Al for a more detailed update on our progress in R and D.

Speaker 3

Thank you, Michelle, and good morning, everyone. As always, I'd like to start by thanking the Biogen team For their hard work as we continue to advance our R and D programs. In addition to key readouts in major depressive disorder and ALS, We hosted an R and D Investor Day to tell you about our pipeline programs, research capabilities and expertise. I encourage you to take a look at these presentations on our website. Let me now start with Alzheimer's disease, beginning with aducanumab.

Speaker 3

At the R and D Day presentation earlier this month, I underscored the importance of determining the relationship between drug to biology As well as biology to disease during the drug development process. In late June, FDA made data from the drug Approval package of AdjuHelm publicly available. The clinical pharmacology review included in the approval package addresses some of these key relationships As shown in the next two slides. This first slide shows the relationship between the amyloid plaque burden As measured by the observed SUVR score versus drug exposure as measured by the predicted cumulative AUC, Both at week 78, taking into account all of the data from both Phase 3 trials of aducanumab. The relationship between exposure to aducanumab and amyloid plaque reduction is consistent across the two studies And shows that amyloid plaque burden decreases as the cumulative drug exposure increases.

Speaker 3

The next slide shows another figure from the same document, which plots the relationship between the reduction in amyloid plaque burden As measured by SUVR and the preservation of clinical function as measured by the CDR sum of boxes across multiple dose levels of several anti abeta antibodies. Studies 301 and 302 are referred to Study 2 and Study 1 respectively in the Aduhelm label. When viewed together, these data from 6 different anti amyloid antibodies Show that there is an association between amyloid plaque reduction and a reduction in clinical decline And that greater degrees of amyloid plaque reduction are needed for a reduction in clinical decline. At the annual AAIC meeting in July, we presented additional data from the EMERGE, ENGAGE and PRIME trials, Which showed that aducanumab treatment led to a reduction in amyloid plaques as well as downstream biomarkers of Alzheimer's disease pathophysiology And that this also led to a slowing of clinical decline. We are looking forward to presenting more data from our aducanumab trials, including the baseline data from the EMBARK study at the upcoming CTAD meeting next month in Boston.

Speaker 3

We're also looking forward to presenting at the earliest possible opportunity at a scientific venue new data on plasma P-1 hundred and eighty one tau, Reflecting the downstream biological and clinical effects of aducanumab, which I believe will be of great interest to scientists and clinicians. By way of reminder, amyloid plaques containing abeta protein and neurofibrillary tangles containing phosphorylated tau Are the defining pathophysiologic features of Alzheimer's disease. Finally, I'm happy to say that we are on track We will publish the Phase 3 aducanumab trial results in a major peer reviewed journal. This quarter, we also submitted a draft protocol The required Phase 4 confirmatory trial of aducanumab to the FDA. As I have said before, we have fully resourced the study And aim to complete it ahead of schedule.

Speaker 3

The key goal of the confirmatory study is to ensure that we enroll appropriate numbers of Alzheimer's disease patients from underrepresented populations. It is estimated that by 2,030, Nearly 40% of all Americans living with Alzheimer's disease will be African American or Latinx, and therefore, having sufficient participation of these Communities is especially important to reflect the diversity of the disease in the real world. Through the Phase 4 confirmatory study As well as EyeCare AD, we aim to provide further evidence of the clinical benefits and risks associated with aducanumab treatment. Outside of the United States, we are under regulatory review in multiple geographies, including the EU, where we are actively preparing for a scientific advisory group meeting as part of the CHMP review process. Turning to lecanumab, we are looking forward to when we can potentially provide 2 anti amyloid antibody options for Alzheimer's disease patients.

Speaker 3

As previously announced, our collaboration partner Eisai recently initiated a rolling submission of the lecanumab data To the FDA for potential accelerated approval. We expect this submission to be complete sometime in 2022. Moving to MS, we presented new data at the Annual ECTRIMS meeting last week, including primary results From the NOVA Phase 3b study, evaluating the efficacy of Tysabri extended interval dosing versus the approved every 4 week dosing. A real world claims based analysis of relapse and hospitalization rates in MS patients treated with natalizumab versus ocirilizumab, A new analysis of the EVOLVE MS2 data focusing on the impact of dose titration on the GI tolerability of LUMERITY relative to TECFIDERA and data from the MS path showing that 100% of people with MS Treated with natalizumab, interferons or fumarate achieved an antibody response following COVID-nineteen vaccination As compared to 40% of MS patients treated with anti CD20 or S1P therapies. With respect to the introduction of VUMERITY in the EU, we were happy to learn of the approval in Switzerland as well as the positive CHMP opinion And look forward to the final EMA decision.

Speaker 3

In neuropsychiatry, we were excited to see the results of the Phase 2 study of zuranolone In major depressive disorder recently completed by Shionogi. The Phase 2 trial was similar in design to the other studies evaluating zuranolone and MDD and compared 20 30 milligram doses of zuranolone to placebo in Japanese patients with MDD. The results of this study further support the safety and efficacy profile of ziranolone in that it demonstrated rapid onset and significant reductions And the HAM D17 score at day 3, day 8 and day 15. Additionally, while not statistically significant, We see separation from placebo for both the 20 30 milligrams around all treatment arms out to day 57. All adverse events in the study were mild to moderate and consistent with the known safety profile of ziranolone.

Speaker 3

The Cianobe study is now the 3rd double blind placebo controlled trial evaluating uranolone In MDD, where the primary endpoint of the change in the HAM D score at day 15 was met. These results in MDD are in addition to the efficacy of zuranolone in PPD as observed in the ROBIN study. Given the consistent results observed across the zuranolone trials, Biogen and Sage have announced plans to submit an NDA to the FDA in the second half of twenty twenty two. The planned initial submission package will be used to seek approval of ziranolone for the treatment of major depressive disorder And an additional filing for postpartum depression is anticipated in the first half of twenty twenty three. Additionally, the CORAL study designed to evaluate zuranolone as an acute rapid response therapy when co initiated with standard anti Moving to neuromuscular disorders.

Speaker 3

Earlier this week, we announced results from the pivotal Phase 3 study evaluating to a person And people with SOD1 mediated ALS. The Phase 3 or VALOR study utilized the study enrichment approach to stratify Participants into faster and slower progressing cohorts. We were disappointed to learn that the study did not meet the primary endpoint of a statistically significant change from baseline to week 28 in the ALS functional rating scale in the faster progressing population. Nevertheless, we did observe encouraging trends favoring Tufersen across multiple secondary and exploratory measures of biological And clinical activity, including assessments of motor function, respiratory function, muscle strength and quality of life. Moreover, a pre specified integration of data from the Phase 3 study and its ongoing open label extension study Reinforced these findings and showed that early to 1st in initiation led to a slower decline across these measures.

Speaker 3

Beyond the clinical measures, we observed reductions in CSF SOD1 as compared to placebo, suggesting target engagement was achieved. Moreover, on the key secondary endpoint of a change in plasma neurofilament light, a potential marker of neuronal degeneration, We observed reductions of 67% in the faster progressing patients and 48% in the slower progressing patients With the first in treatment relative to placebo. To our knowledge, this represents the greatest reductions in plasma neurofilament levels Ever observed in an ALS clinical trial. Most adverse events in the Phase 3 study were mild to moderate in severity And many were consistent with ALS disease progression or lumbar puncture related events. Serious adverse events, Including transverse myelitis, we're seeing in some patients receiving to person.

Speaker 3

Based on the results of the Phase 3 study, We are actively engaging regulators, the medical community, patient advocacy groups and other key stakeholders around the world to determine next That's up to person to all eligible SOD1 ALS patients through an expanded access program. Given the possible importance of early treatment of SOD1 ALS, we continue to enroll patients in the ATLAS study, A Phase 3 trial of Tafersen initiated in clinically pre symptomatic SOD1 mutation carriers. Our hope is that treating patients earlier in the disease may provide the best opportunity to slow or even delay the onset of this terrible disease. Also in neuromuscular disorders, this quarter we announced our plans to initiate ASCEND, a Phase 3b study, which aims to evaluate whether treatment with an investigational higher dose of nusinersen has the potential to improve clinical outcomes in patients previously treated with risdiplam. Our SPINRAZA data indicate that exposure remains similar as patients age and grow.

Speaker 3

We're also advancing the ongoing DEVOAT study, Evaluating the safety and efficacy of higher exposures of SPINRAZA as our preclinical studies indicate That we ought to be able to safely increase its dose. With the DEVOT and ASCEND studies, we hope to be able to further inform SMA treatment and address the remaining unmet needs of patients. In summary, as I described during our recent R and D Investor Day, We believe the science is breaking and that this is exactly the right time to be pioneers in neuroscience. By leveraging a deep understanding of human genetics And disease biology, we are working to usher in the future of neurotherapeutics, where we identify the right patients and treat early, perhaps even before the onset of symptoms to meaningfully delay or even prevent disease progression. I will now turn the call over to Mike.

Speaker 4

Thank you, Al. We are very pleased with our Q3 results as we continue to execute well. As we move forward, we remain fully focused on our core business, including the launch of Aduhelm in the United States. Total revenue for the Q3 of $2,800,000,000 declined 18% versus the prior year At both actual and constant currency and reflects the impact of Tecfidera Generics. Total MS revenue for the Q3 was $1,800,000,000 inclusive of OCREVUS royalties.

Speaker 4

Looking at some of the individual products within MS. Global Tecfidera revenue for 3rd quarter was $499,000,000 In the U. S, 3rd quarter revenue of $179,000,000 was flat versus the prior quarter With lower volume offset by a decrease in discounts and allowances, we expect TECFIDERA revenue in the U. S. To decline going forward.

Speaker 4

Outside of the U. S, 3rd quarter Tecnadera revenue of $319,000,000 increased by 13% versus the prior year with 7% underlying patient growth. We were pleased with the continued ramp in PUMERITY revenue $91,000,000 in the 2nd quarter to $121,000,000 in the 3rd quarter. We are also pleased that PUMERITY received a positive CHMP opinion in the EU as well as full regulatory approval in Switzerland. Tysabri 3rd quarter global revenue of 5 $3,000,000 increased 1% versus the prior year, notwithstanding some negative channel dynamics in the United States.

Speaker 4

We were pleased to see 7% growth in global Tysabri patients and we believe Tysabri remains well positioned to play an Increasingly important role in the treatment of MS with initiatives including subcutaneous administration and extended interval dosing. We are also encouraged by the new data on COVID vaccinations that Al mentioned. Moving to SMA, Global 3rd quarter SPINRAZA revenue of $444,000,000 decreased by 10% versus the prior year. In the U. S, SPINRAZA revenue of $140,000,000 decreased by 23% versus the prior year as we see continued impact from competition.

Speaker 4

However, we were encouraged to see the discontinuations decreased versus the Q2 of this year. Outside the U. S, SPINRAZA revenue decreased 2% versus the prior year due to competition and pricing pressure in Europe, partially offset by growth in regions outside of Europe. As a reminder, Q1 and Q2 twenty twenty one SPINRAZA revenue outside the U. S.

Speaker 4

Benefited from accelerated shipments. With overall market growth, continued data generation, the efficacy and safety profile in all age groups And further geographic expansion, we continue to believe that SPINRAZA can return to growth over the medium to long term. Total Aduhelm revenue for the Q3 was $300,000 as we saw wholesalers gradually draw down inventory purchased in Q2. For the three main reasons Michelle discussed, uptake has been delayed. I would refer you to this slide as well as slides in The appendix for details on the accounting with Eisai and Neuroimmune, which differs depending on geography.

Speaker 4

Moving on to our biosimilars business, 3rd quarter revenue of $203,000,000 decreased by 2% versus the prior year As we continue to be negatively impacted by pricing pressure as well as the COVID-nineteen pandemic. We are excited that BioViz was approved in the U. S, EU and U. K. And believe that we have the opportunity to continue to grow our biosimilars business By commercializing new products and entering new geographies such as the U.

Speaker 4

S. Total anti CD20 revenue in the Q3 of $415,000,000 decreased 26% versus the prior year. This decline was primarily driven by the decline in RITUXAN revenue as we see continued impact from biosimilars, a trend that we expect going forward. Total other revenue in the Q3 of $158,000,000 increased 26% versus the prior year. Other revenue in the quarter benefited from the timing of shipments related to contract manufacturing.

Speaker 4

3rd quarter gross margin was 82% of revenue, down slightly from 83% in the prior quarter and down from 87% in Q3 of 2020. The reduction in gross margin versus the prior year was primarily due to the declines in TECFIDERA and RITUXAN, both of which are high margin products. We expect continued downward pressure on gross margins going forward. Moving now to expenses and the balance sheet. 3rd quarter non GAAP R and D expense was $702,000,000 which included a $125,000,000 upfront payment Related to our collaboration with Innocare, non GAAP SG and A was $651,000,000 including $135,000,000 related to Aduhelm.

Speaker 4

Note that beginning in the second quarter, Eisai's reimbursement of U. S. SG and A costs is reflected in the collaboration profit sharing line. 3rd quarter collaboration Profit sharing was a net expense of $21,000,000 which includes a reimbursement of $51,000,000 from Eisai related to the commercialization of Ajehelm In the U.

Speaker 5

S,

Speaker 4

our effective non GAAP tax rate for the quarter was approximately 14% versus approximately 19% in the Q3 of last year. 3rd quarter non GAAP loss attributable to non controlling was $11,000,000 As a reminder, Aduhelm royalties and commercial launch milestones paid to Neuroimmune will be reflected in this line. Eisai's reimbursement for these items will be reflected in collaboration profit sharing. During the quarter, we repurchased 2,200,000 shares of the company's common stock for $750,000,000 As of September 30, 2021, there was $2,800,000,000 remaining under the share repurchase program authorized in October of 2020. Our weighted average diluted share count was approximately 149,000,000 shares for the quarter.

Speaker 4

Non GAAP diluted earnings per share in the 3rd quarter was $4.77 In the Q3, we generated approximately $805,000,000 in cash flow from operations. CapEx was $42,000,000 and free cash flow was approximately $763,000,000 We ended the quarter with $7,300,000,000 in debt, dollars 3,900,000,000 in cash and marketable securities and $3,300,000,000 in net debt. In addition, our $1,000,000,000 revolving Credit facility was undrawn as of the end of Q3. Overall, we remain in a very strong financial position with significant cash And let me now turn to our updated full year guidance for 2021. We are increasing our full year 2021 revenue guidance from our previous range of $10,650,000,000 to $10,850,000,000 to a new range of $10,800,000,000 to $10,900,000,000 primarily as a result of stronger MS performance.

Speaker 4

We are increasing our non GAAP diluted EPS guidance from our previous range of $17.50 to $19 To a new range of $18.85 to $19.35 primarily driven by the revenue upside I just mentioned. We are lowering our capital expenditure guidance from a previous range of $375,000,000 to $425,000,000 to a new range of $250,000,000 to $300,000,000 Primarily as a result of delayed spend on certain projects, including some which have been impacted by COVID-nineteen. Our guidance assumes minimal Aduhelm revenue in 2021. We continue to expect revenue to start ramping in 2022 and beyond, particularly after the NCD decision in April, assuming a positive outcome. We expect continued declines in both TECFIDERA and RITUXAN in the U.

Speaker 4

S. And that the decreased revenue from these high margin products will put pressure on our gross margin percentage. Full year non GAAP R and D Expenses are expected to be between $2,450,000,000 $2,550,000,000 This range is consistent with our previous guidance. Full year non GAAP SG and A expenses are expected to be between $2,600,000,000 $2,700,000,000 This range is consistent with our previous guidance and includes an approximate $500,000,000 Aduhelm investment. Of this amount, approximately $150,000,000 would be reimbursable by Eisai and is reflected as collaboration profit sharing effective April 1st And not part of SG and A.

Speaker 4

These Agi Helm investments are slightly less than our previous estimates and of course we will continue to actively manage the pace of this spend. This annual SG and A range also assumes a seasonally higher spend in Q4 consistent with previous years. I would refer you to our press release for other important guidance assumptions. In closing, we are very pleased with our financial performance and are very focused on the AgiHome launch. We remain in a very strong financial position with significant cash, modest leverage and a business that generates significant free cash flow.

Speaker 4

We believe these dynamics position us well to continue to grow the business over the long term. I'll now turn the call back over to Michel for his closing comments.

Speaker 2

Thank you, Mike. Biogen continues to demonstrate resilience and strong execution in the Q3 of the year, providing a solid foundation for the company As we make progress on the AduHelm launch ahead of the important data releases and publications in addition to the NCD decision For the class of anti amyloid antibodies anticipated next April. We believe Aduhelm presents a significant step In the fight against Alzheimer's disease as the 1st FDA approved treatment to address the defined pathology of the disease, which is reasonably likely to predict clinical benefit. We know there are patients suffering right now from the disease And it is those patients we keep in mind as we work to support access. In fact, at the CITAD meeting next month, We'll be presenting an analysis showing that without access, every day that passes, we estimate that over 1,000 Americans Move from mild to moderate Alzheimer's dementia and therefore may no longer be appropriate for initiation of treatment with Aduhelm.

Speaker 2

As many have observed, our current system so far falls short In diagnosing and intervening in the disease. In addition, Alzheimer's disease is a particularly acute issue Of inequality, as African Americans are up to 3 times more likely and Latinx individuals 1.5 times more likely to have Alzheimer's disease when compared to others. We understand the seriousness of this issue And that inclusion of underrepresented population in drug development is often low, including in our Alzheimer's clinical trial. We also know that we have work to do and a role to play in correcting this. For that reasons, the design of EyeCare AD, Our real world Phase 4 observational study of Aduhelm aims to include at least 16% of the trials is expected enrollment from Black, African American and Latinx patients.

Speaker 2

In closing, I would like to thank our employees around the world who have demonstrated their dedication To making a positive impact on patients' lives and all of the physicians, caregivers and participants in our clinical development programs, Our ability to deliver medicines to patients could not be realized without a passion and commitment. We will now open the call for questions.

Speaker 6

To one question. Your first question comes from the line of Robynne Karanaskos.

Speaker 7

Yes. Thanks for taking my question. I think, a lot of us have struggled with some of the headlines coming from doctors about how they do not want to give the drug. And I understand that you're highlighting, You know, the NCD lack of an NCD decision is the core crux for lack of reimbursement. But can you talk a little bit about How are you going to convince doctors, even if you have a positive NCD decision, to give the drug to patients?

Speaker 7

And is that something that We're seeing it in the headlines. Is that something that you're dealing with? Is that a core block for uptake of the drug?

Speaker 2

Absolutely, it's Robin, it's actually the first priority that we have is To basically educate the community based on additional data, on the current data communicated and additional data that we're going to communicate and publish In the near future. They also expect to see a full publication in the PRW journal. And sometimes this is brought forward, but also the worry is the financial risk In terms of lack of coverage of NCD, so those issues are interrelated. I will ask Alicia to say a bit more.

Speaker 8

Thank you, Michelle, and thank you, Robin for the question. This is actually not an exact science. And what we believe and what we are hearing is that the majority of prescribers actually fall into a combination of 2 categories. The first is going to be around the benefit risk profile, which of course you are reading about and the question refers to. And the second is Also what we refer to, which is the hesitancy due to the NCD analysis.

Speaker 8

However, there are a meaningful portion of Prescribers that are still undecided. So those are some of the headlines. We do have a very large bucket that haven't made a decision one way or another. And this is why we have multiple teams working every single day and working very hard to help educate sites in HCPs in our clinical data And on the reimbursement pathways, which you know are very complex. And Michel referenced this also in his opening statements, but we're working with urgency because the cost Of doing nothing is also well understood.

Speaker 8

And, Michelle mentioned that we estimate that 1,000 patients a day advance in their Timers journey from mild to moderate AD and they may no longer be appropriate for AgiHomes. So we are really committed to being a part of this solution And that's what motivates us each and every day. And as soon as we get more data, we will be sure to share it, because we understand where the question

Speaker 1

is coming from. So thank you.

Speaker 2

We believe, Robin, that evidence not only coming from Adeo, but also potentially from other anti amyloid products We represent a significant body of evidence for those who were initiating and Challenging the amyloidaiva hypothesis since years. And we are also very encouraged By the data on Abuel, we continue to stand very strong behind our data. That's why it was really in the script 2 or 3 times. So more to

Speaker 6

come. Thank you. We'll take our Question from the line of Michael Li with Jefferies.

Speaker 5

Hi, good morning and thank you for the update. Appreciating that you commented that the NCD, of course, is an important milestone. Can you comment around Your view around what the scenarios would be and what you believe a positive NCD outcome is And how important pet reimbursement would be as a part of that positive outcome? Thank you.

Speaker 2

Thank you, Mike and Michael. And as you know, we're advocating for pet reimbursement since many months. And Alicia will provide more color on the different Options, Alicia, in terms of NCD? Yes.

Speaker 8

Thank you, Michelle, and thank you, Michael, for your question. So it's important to remember, as we've stated, that NCD is not only for Aduhelm, right? It's going to be for the entire class of monoclonal antibodies target amyloid for the treatment of Alzheimer's disease. Now we can't actually speculate on the outcome of the NCD analysis, But as you know, we do believe it will be a major milestone and this will alleviate a lot of the confusion that we're seeing with physicians. However, there are 5 potential outcomes.

Speaker 8

And I think the 3 that people mostly talk about and are most interested in are, one, being a no coverage decision. The second is going to be coverage with evidence, which we call CED, and the other will be coverage with restrictions. And if you look at history and you look And you look in the past over the last past 20 years, there's only been 12 that have gone through this process. 1 was a non coverage, One was an off label for a CED and the other 10 were basically covered indication. So even though we can't really comment on it, We are in this rigorous process.

Speaker 8

We are replying to them anytime that they need additional data, but just remember that all manufacturers are in this process together.

Speaker 2

Next question.

Speaker 6

Thank you. We'll take our next question from the line of Cory Kasimov with JPMorgan.

Speaker 1

Hey, good morning, guys. Thank you for taking my question. So I get that we're all waiting For the NCD, but at this stage of the launch, is there any consideration at all being given to changing the gross price of AdjuHelm given how difficult initial traction Has been or do

Speaker 3

you think that's not a key impediment in all of this?

Speaker 2

I think that NCD is critical, Data dissemination is even more and one is interrelated to the other. And when we look at the metrics, strategic metrics, Market research price doesn't come up as the first worry. We have strong rationale. We clearly disagree with the underlying assumption of ISOs assessment, inappropriate pulling of data, pessimistic assumptions on long term efficacy and many more. And I don't think we are the only one in the industry, okay?

Speaker 2

So obviously, we have always the opportunity To fine tune our pricing and we keep that as an option. But first is data And data is interrelated obviously with the decision for NCD and infrastructure is also in the meantime progressing. Alicia, do you want to say a feedback on the issue of price?

Speaker 8

Yes. Thank you, Michelle. And thank you, Corey, for the question. And Michelle is absolutely right. While price is always an important factor for sites and for patients, what I can share with you is that we have not heard That price is the primary driver for any decision not to treat patients.

Speaker 8

In fact, the headwinds That we're facing are the ones Michelle has mentioned and that you clearly also read in the press every day and you probably see, when you are reporting with your analyst reports. But as with other therapies, if patients think they might face difficulty affording Agi Helm, we do have financial assistant programs that are available that can help these patients. So if reimbursement or affordability are potential concerns, we hope that our programs can provide really a potential pathway for them Because we do believe that a lack of financial means should not be a barrier, for patients to access AgiHome.

Speaker 2

And importantly, Corie, you will remember that At launch day 1, we did give the hand to decision makers for innovative contract For price volume, but not limited to on a voluntary basis in order to secure sustainability. And remember, it's not 6,000,000 patients, even not 1 to 2, it's a portion of those that will be gradually treated. So we did offer that and decision makers and CMS are aware, but now it's the NCD process. So we step back and we respect this process. The offer is out there.

Speaker 2

Next question.

Speaker 6

Thank you. We'll take our next question from the line of Mark Goodman with SVB Leerink.

Speaker 9

Good morning. My question is on zuranolone. Moving forward with this product is a 2 week treatment course implies a pretty significant kind of cost per pill and basically it would be really an all in strategy on a paradigm shift in depression treatment, It seems a little bit risky. I'm just curious about the market research that you've done and the conversations you've had with psychiatrists to know that They have a buy in and that this is a good strategy and this is going to really be successful. Obviously, the product works pretty quickly, which is In and of itself important, but the 2 week treatment course would be very, very different.

Speaker 9

Thanks.

Speaker 2

So what is important is that eventually we'll be in a position to transform the management of major depressive disorders and post Part on depression and for the time being, we are driven by science readouts and the additional data we get. I must admit that We didn't have yet a discussion on price. Well, I know that the team starts to build data and market research evidence In order for us to be ready, should the data confirm, but we are pleased with the 3 placebo controlled results going to the same direction.

Speaker 3

Yes. Thanks, Mark. It is a paradigm shift and a different way of thinking for psychiatrists. So there'll be a lot of education necessary, Assuming we do get approval. I think that though that the current standard of care is to use SSRIs or SNRIs.

Speaker 3

It takes weeks, if not more than a month for them to work. And then patients stay on them chronically, often with side effects. And that's not a great situation. And the reason why people stay on them chronically is because they're slow onset of action. So having a 2 week treatment course Where you can then take the drug as needed is a very different way of thinking and I think would be attractive to many treating physicians.

Speaker 3

And the fact that it's rapid onset allows people to give the 2 week treatment And wait for the next as needed treatment because they know they can be reassured that within 3 days of starting, They see efficacy they will see efficacy in their patients. So it is a different way of thinking, but I think it's very, very exciting. Next question.

Speaker 6

We'll take our next question from the line of Matthew Harrison with Morgan Stanley.

Speaker 10

Good morning. Thanks for taking the question. Al, I was wondering if you could comment And just remind us around the differences in the BAN2401 Phase 3 study versus the ADUHELM studies. And the context here is, How important do you think a successful Phase 3 study is for BAN2401 next year, especially in terms of Changing physician perception around Aduhelm and anti amyloid drugs. Thanks.

Speaker 3

Yes. I think it's very important, Matthew, because, as has already been stated, doctors are uncertain about the benefit risk. And as Michelle said, the data that comes not only from aducanumab, but from all of these anti A beta antibodies that share The characteristic of being able to greatly reduce amyloid burden, that will be very important. The difference there are more Similarities and differences between aducanumab and licanumab both bind to aggregated forms of abeta, Both reduce amyloid plaque burden quite substantially. The differences are that there's no titration needed For lucanumab, and the rates of ARIA at the present time do seem to be low.

Speaker 3

We'll find out in the Phase 3 study, but they seem to be lower than the rates of ARIA with aducanumab And it's given every 2 weeks. So and look, the design of the Phase 3 trial to your question is very similar to the design Of the aducanumab Phase 3 trials, for example, the primary endpoint is CDR Summit Foxes, which is the established

Speaker 2

Next question.

Speaker 6

Thank you. We'll take Our next question is from the line of Geoff Mehta with Bank of America.

Speaker 3

Good morning, guys. It's Geoff. Just had another one on EDUCOM. Prior to approval, you guys have talked about expansion of manufacturing capacity and investing Pretty heavily in the commercial aspects of the launch. I guess the question is, has the strategy changed just given the pace of the rollout?

Speaker 3

I'm just trying to get a sense for Whether it's more of a holding pattern before the April NCD or you guys are going to remain aggressive on the investments that you're making in the AGM launch? Thank you.

Speaker 2

Thanks for the great question. We stay the course as a company clearly, because it's as if we were in a delayed Pre launch in an extended pre launch period before the launch and we stay the course. Obviously, we are staging the spend Very closely, Mike and I and the team are scrutinizing the investment request coming from all around the world. So we want to be extremely vigilant and we are, but we stay the course because we do believe in our data. We do believe in additional data coming up And we do believe that the system will adjust.

Speaker 2

And it's a matter of little bit of time you saw on the slide presented that there is a clear process. We are not far from being there, so we stay the course. Mike?

Speaker 4

Yes. Jeff, it's a great question. And I would describe it as a gating process. We Continue to believe in the long term potential of Aduhelm, and at the same time because of the delays, We're going to gate the spend. So we are still making a meaningful investment to the tune of an estimate of $500,000,000 of SG and A call it $350,000,000 net of reimbursement in 2021.

Speaker 4

The CapEx, some of that does tie to facilities to support I'll add to Helm and we are gating that most of the reduction in our CapEx guidance ties to timing and we're also managing a challenge global So we're going to be prudent and we're going to gate, but we are going to continue to be ready At the moment in time and invest aggressively, but at the same time being prudent in gating as we go.

Speaker 2

And it's a pre launch somehow, Extended pre launch, but we are encouraged by the progress. 120 centers that reference in their formulary at your helm and this is More than doubled than a month ago, Alicia. So there is a lot of progress. And if they have some large institutions that denied, They want more data and will be there in a few weeks. So it's a process that is unfortunately taking longer than we expected, But we have to be resilient and the signal we want to send is that we believe because we know the data and we see the progress.

Speaker 5

Next question, please.

Speaker 6

We'll take our next question from the line of Umer Raffat with Evercore.

Speaker 11

Hi, guys. Thanks for taking my questions. I have two parts, if I may. So first, Mike and Michelle, very helpful commentary on helping us model out Aduhelm for the balance of 2021. But Street is still carrying $1,000,000,000 in U.

Speaker 11

S. Aduhelm for 2022, which basically implies north of 75,000 new starts on Aduhelm next year in U. S. Most would argue 75,000 new starts for next year is probably too high. But I guess Since we're trying to level set today, is 25,000 new starts for next year too high in expectation?

Speaker 11

And then also, Michelle, I feel like As we're heading into the Ban 20 41 PDUFA, it feels like there wasn't enough street discourse between Biogen Management and The Street Ahead of Aduhelm pricing. And I wonder, is it reasonable for Street to expect a BAN2401 price point, which is more consistent with our Alzheimer's meds? Thank you very much.

Speaker 4

So, I'll take the first part of the question, Umer. We're not Guiding today for 2022, but I would say a couple of things. We did say that we expect minimal revenue throughout the rest of 2021. We are expecting still a revenue ramp in 2022 post NCD assuming it's successful and that would be in April. So That should give you some sense for the Q1.

Speaker 4

We're in a bit of a delay until that happens. We don't have great visibility to patient counts, which is We don't comment on them publicly, but we did give you we can say that the sites are continuing to progress. We're at approximately 120 sites now that have infused at least one patient, which is more than double what it was about 6 weeks ago. And we're going to continue to monitor those metrics and we'll ramp it as quickly as we can. But because of all the pieces, That does cause a bit of a delay.

Speaker 4

And then the other important thing to remember is titration. So to the extent that we get through a successful NCD, there is still patient titration And dosing levels that need to ramp up, and so the revenue ramp is going to be gradual. But the important takeaway is that over the long term, we continue to believe That is a very meaningful multi $1,000,000,000 opportunity.

Speaker 2

So we do believe that the uptake will certainly accelerate Once the system has indication of a potential coverage in January and then the final decision in April. But I don't expect that this uptake to be explosive. At the same time, I don't expect this to be linear. We believe there will be an acceleration nonlinear of the uptake because the patient journey is still long. And while we make tremendous progress and beyond the 120 centers, 100 are progressing towards listing the product, It's really a gradual process, but we won't say more at this stage about the number of patients, but we'll have the opportunity to come back.

Speaker 9

And then

Speaker 4

on the band pricing, that's something obviously we'll determine at the appropriate time, and something that we'll be thoughtful about. I'm not sure there's a whole lot more we can say about it at this But we continue to progress the process there and we're pleased with the initiation of the rolling submission there.

Speaker 2

Next question.

Speaker 6

Thank you. We'll take our next question from the line of Ronny Gal with Bernstein.

Speaker 12

Good morning. A question about the Idohome versus lakanumab dynamics. If you kind of look at Slide 10 in your presentation, It does look like lekanimab has at least the same benefit as iduham does. And given this drug will have full pivotal Positive there, presumably positive in the Q3 of next year. It's a safer product and it is indeed the product you're taking into Pre symptomatic Alzheimer's, I kind of wonder when you talk about Idujam being your growth driver longer term, are we really saying it's either Alduham or Ben-two forty one.

Speaker 12

Can you talk a little bit about the comparative dynamics of the two products? And could Ben-two forty one end up being the major Alzheimer products About Biogen markets in the future years.

Speaker 2

So we are delighted to see lekanimab coming along Strong with a rich database after Aduhelm, more than 600 patients, but it's only a Phase 2. So we need to see the Phase 3, but certainly very positive and reinforcing and the line modification And signals, we'll have the opportunity and the luxury to have 2 assets. Importantly, I want to reiterate that we stand by the data Because we know the data, we see the data, we see the new data and we are very confident in the profile and the benefits risk of this product For the long run. Now with Leka, it's even a stronger position, but we'll need to wait for additional data. Al?

Speaker 3

Yes, I agree. In my experience, things look really, really good after Phase 2 sometimes. But then Phase 3, it's a larger study, more sites, more countries. And so, I think time will tell. And then of course, we'll get the label.

Speaker 3

So, I agree with Michelle.

Speaker 1

Next question please.

Speaker 6

Thank you. We'll take our next question from the line of Salim Sood with Mizuh.

Speaker 13

Great. Good morning, guys, and thanks so much for the color and detail. I had one on AddiHome. So when we look at Peak sales for Adient on the street seems like the salicide seems to be carrying around $9,000,000,000 in peak sales for this Drug fill. And when I run the math here, it seems like that's more based on a chronic sort of Administration and usage of the product.

Speaker 13

But when we consider things like coverage with evidence and that this product may not be I think you guys have mentioned as well, in moderate patients, it's no longer appropriate to use the product. And that this is a significant portion or could be a significant Portion of the Medicare Part B wallet, should people be really looking at this more you think as an incidence based model And the duration of coverage cap coming out of the NCD potentially?

Speaker 2

I'm not sure people will look solely at the incidents As if we're doing that for SMA or for HIV, I think Al will comment on that. We continue to stand behind the data and we believe the long term prospects are significant in terms of value creation. We believe the competition will enlarge the market and the epidemiology being so large that there is room for Four actors and out of the 4, we have 2. And it's a global play also. And we are not panicking because It's not because there is a delay in the U.

Speaker 2

S. Because there is a process. The system is not ready. Evidently, we can see that, but it's a long way to go. Al?

Speaker 2

Yes.

Speaker 3

I think underlying your question is, the possibility, I think, that you proposed that you could stop treatment after a certain period of time. And I refer you to the beautiful data generated by my colleagues at Eisai shown at the AAIC, Where they took their Phase 2 trial patients and there was a treatment gap and they looked at them in the follow on study. And during that treatment gap, even though the amyloid plaque burden remained low in those in which amyloid plaque had been removed by lecanumab, That during that treatment gap, A beta-forty two-forty ratio changed slowly over that period suggesting that there are changes going on Biologically related to the amyloid pathway during that gap period. So I think the jury is still out on whether or not chronic treatment is needed. And I think that remains to be studied and we look forward to providing more data on that.

Speaker 3

Okay.

Speaker 1

We have time for I think one more question.

Speaker 6

We'll take our last question from the line of Phil Nadeau with Cowen and Company.

Speaker 5

Good morning. Thanks for fitting me in. A question on the sites that are activated. You mentioned that 120 sites are currently activated. We're curious to know how many you think You could have activated by the NCD decision in April.

Speaker 5

And also, could you talk a little bit more about The challenges in opening those sites, are the challenges the exact same as you see with the physicians? Or are there additional issues like The logistics around monitoring for ARIA or giving the infusions. Thanks.

Speaker 8

Alicia? Yes. So thank you for the question, Phil. And I think when you take a step back and you look at the activated sites, which you know were right around 100 and 20 or more. And we do have several 100 that are in queue on this journey, right?

Speaker 8

So we're giving you a number that talks about the activated site, which means one patient has been infused, But it doesn't capture all the sites that are going through these multiple steps. The operational challenges are still the same. And when you really look at this, I mean, being first and being a pioneer in this space has been overwhelming for the system and for these sites. They've never had a drug like This ever for their patients. And writing their protocols, having to go through all the steps of finding where will they do an MRI, where how will they do the lumbar puncture, And where they do their infusions has been taking them some time.

Speaker 8

I was talking to a couple of sites just last week and they've been trying to do this since June. So it's been taking them several months to get up and running. But when you think about our original strategy, which was focusing on the sites where the majority of our patient population have Already been diagnosed. You do remember that over 900 sites were ready. So we believe that once we, of course, Get our additional data out, we share our data and the NCD outcome is finalized.

Speaker 8

Those are going to be the majority of the sites that will

Speaker 2

So thank you so much For attending the call today, Biogen delivered a very strong quarter again. The base business is solid. We are making some progress for aducanumab for Aduhelm despite the short term challenges we face. So what is key is The outlook and the mid to longer term. We have a path forward for zuranolone and we are getting prepared to launch The biosimilars of Lucentis in the U.

Speaker 2

S. In a few months from now. Thank you very much for attending the call. Exciting time at Biogen.

Speaker 6

This concludes today's call. Thank you for your participation. You may now disconnect.

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