BIOGEN INC. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Product Launches: LEQEMBI global revenue grew 66% QoQ, with continued uptake outside the US and new prescriber growth in the US. SKYCLARYS is expanding in Europe with increased patient numbers despite pricing and reimbursement challenges. ZURZUVAE shows sequential growth in revenue.
• Pipeline Progress: BIIB080 completed early recruitment for its intrathecal trial. Dapirolizumab had positive Phase 3 results and a Phase 3 protocol is ready to go. Felzartamab has encouraging data in lupus nephritis and other indications. The DEVOTE study for SMA showed positive results for the higher-dose regimen of nusinersen.
• Alzheimer's Efforts: Working on maintenance dosing options for LEQEMBI, with regulatory decisions expected in 2025. AHEAD 3-45 study for preventing or delaying Alzheimer's completed enrollment in October.

Segment Performance

• LEQEMBI: Global revenue in the third quarter was approximately $67 million, up 66% from the second quarter. In-market sales in the US were $39 million, up 33% from the second quarter. Revenue contribution from LEQEMBI is significant as it shows sequential growth.
• SKYCLARYS: Generates revenue from commercial and other paid mechanisms in 15 markets outside the US. Saw increased demand globally, especially in Europe, with patients added daily exceeding expectations. Revenue in Europe is affected by pricing and reimbursement dynamics across countries.
• ZURZUVAE: Delivered $22 million of revenue in the third quarter, up 49% from the second quarter, driven by a 40% increase in patients.
• Rare Disease (SPINRAZA): Global revenue was $381 million, down $67 million or 15% due to a loss of an annual tender in Russia and timing of shipments. US revenue was up 2% to $153 million. The higher-dose regimen of nusinersen in the DEVOTE study showed promising results for addressing unmet need in SMA.
• Contract Manufacturing, Royalty and Other: Revenue was $250 million, notably lower year-over-year as certain batch commitments were completed in 2023.

Guidance

• Raised full year 2024 non-GAAP diluted EPS guidance range from $15.75 - $16.25 to $16.10 - $16.60.
• Anticipates total revenue to decline by a low single-digit percentage.
• Expect seasonally higher SG&A spend in the fourth quarter compared to the rest of the year.
• Believes the Fit for Growth initiative will garner $1 billion of gross and $800 million of net savings by the end of 2025.

Risks

• LEQEMBI US Adoption: US revenue for LEQEMBI is below collaboration expectations and prescriber base expansion is slower than anticipated.
• Europe Pricing and Reimbursement: SKYCLARYS in Europe faces challenges with varying pricing and reimbursement dynamics across countries, leading to lumpy revenue generation.
• Pipeline Uncertainty: Pipeline development has no guarantees, and results of clinical trials for various programs are uncertain.
• Competition: MS product revenue is affected by competitive dynamics, including biosimilar entrants in Europe.

Question and Answer

Q: Hey, good morning. Thanks so much for taking my question. I'm curious on LEQEMBI, when you might expect to see more pull-through from the expanded commercial efforts, whether you're starting to see any of those signals in October. And you mentioned as well the potential for some other commercial acceleration strategies in your prepared remarks. Can you maybe expand on that a little bit more and characterize your overall alignment with Eisai on the commercial plans?

A: I'll take the second part of the question, Brian, and then pass it over to Alisha can give a little more color on the expanded field force. I think we have learned an awful lot really in the year since we launched the product. I mean, the product launch really started really last fall, I mean we had to get all of the commercial team in place, but we also needed clarity around things like reimbursement of the PET scans. So for us, I think this is about the anniversary really of the launch. And there are a lot of things that we are now understanding, the time it can take for IDNs to really get their protocols in place and the care pathways. But there are also a number of things like who's the right patient? And we have also an awful lot more data coming along. We're going to have the subcutaneous formulation, hopefully, next year for maintenance, the IV for maintenance sometime next year. And so it seems opportune for the two partners now to come together and just review what's working well and what could we be doing more. So we'd probably be able to give you some more color on that. I would say the teams are working very well together. We both understand that this is a very complicated launch. I think more complicated than most that I've certainly seen, I think, most people have seen. And yet, we do see a lot of physicians, again, who are really putting an awful lot of work in to make all of this happen to triage the patients as to who's really the right patient, a high percentage of patients coming into the neurologists are not eligible for treatment. Then organizing the PET scans are the lumbar punctures, the MRIs and the infusion beds. So we've seen an awful lot of real effort out there in the marketplace, and we add prescribers every week and we see more sales every week. And so I think that's the way it's going to progress probably until we get the subcutaneous for induction. I think that could be quite a game changer. And again, more use of the blood-based diagnostics in place of the PET scan. Both of those would, I think, dramatically reduce the workload of physicians. But Alisha, maybe you can talk about the expanded field force and anything else you think might be helpful.

Q: Good morning. Thanks for taking our question. Chris, you've referenced the subcutaneous formulation a couple of times already this morning. Could you give us a bit more of an update on the status of the subcu filings both for maintenance as well as for induction?

A: Sure. I'll turn that over to Priya.

Q: Yes. Could you comment a little bit more on SKYCLARYS OUS. There was a comment in the opening remarks about pricing and reimbursement dynamics. And if you could just give us a little more color there to the challenges.

A: Yeah. So as you know, you get approval in Europe, but then you have to go country by country to negotiate for reimbursement. And basically, what we are already doing is seeing physicians, and we're getting patients on treatment. But the actual revenue generation of those patients varies by country. So there are some countries, for instance, where you can charge for an early access program. There are countries where you can't, there are some countries where you can get reimbursement much earlier than other European countries. So we are in that process. What we have not done is really started the revenue generation -- sorry, the patient demand generation with reimbursement. We are active in all countries and signing up patients. And so we're tracking patient numbers, which are growing considerably every month. What you will see in the quarterly revenue numbers is when those patients convert to revenue-generating patients. And that is, by definition, going to be a little lumpy because the patient demand is actually in advance of when we generate revenue. And on the -- on those programs where you have early access that you can pay for, you have to establish a price. But in some cases, there is a clawback if the reimbursed price is going to be lower than what the prices you're charging. And obviously, as we go into countries and have a better idea where the price point is, we've had to make some adjustments on revenue that we have booked and those programs where we can charge for an EAP. And that's just really a normal process in most launches in Europe.