BIOGEN INC. Q4 FY2024 earnings call

Core Priorities - Focus on four launched products in Alzheimer's, Friedreich’s ataxia, depression, and ALS; each is first-in-class/disease modifying. - Reprioritized pipeline with key developments expected in 2026, including a multi-billion dollar portfolio. - Redesigned company to reduce expenses and free cash flow for growth. ### Product Highlights - LEQEMBI: FDA approved for less frequent IV maintenance; data shows 76% of early AD patients stabilized; catalysts include blood-based diagnostics, subcutaneous formulations. - SKYCLARYS: Approved in Chile, 13 regulatory filings under review; expanding global rollout. - ZURZUVAE: Launched, 80% prescriptions from OBGYNs; filed in Europe for approval. - QALSODY: Breakthrough treatment in ALS, accelerates R&D. ### Pipeline - Continued investment in Alzheimer's, immunology, and auto-antibodies; Phase 3 trials for dapirolizumab, Felzartamab; orphan drug designation for Felzartamab.

Multiple Sclerosis (MS): Revenue declined ~8% at actual and constant currency in Q4 2024, driven by competition (biosimilars, generics). Rare Disease Franchise: - SKYCLARYS: Global Q4 2024 revenue $102M, up 83% yoy; U.S. revenue $71M, impacted by inventory and Medicare discounts. - SPINRAZA: Global Q4 2024 revenue $421M, up 2% yoy; U.S. up 6% yoy. - ZURZUVAE: Q4 2024 revenue ~$23M, driven by increased demand. - LEQEMBI: Global in-market sales booked by Eisai $87M in Q4 2024, up 30% q/q; U.S. end-market sales $50M, up 28% q/q.

• Full year 2025 non-GAAP diluted EPS expected $15.25-$16.25; total revenue decline mid-single-digit due to MS decline offset by new product growth. - 2025 MS business impacted by TYSABRI biosimilar in U.S. and TECFIDERA generics in Europe; Medicare Part D impact ~$50M-$100M. - Fit for Growth initiative to deliver $1B gross and $800M net savings by end 2025; combined R&D and SG&A expense ~$3.9B in 2025.

• Competition in MS leading to revenue decline (biosimilars, generics). - Challenges in rare disease patient identification and reimbursement. - Uncertainty in R&D outcomes for pipeline programs.

Q: What is your latest thinking on the capacity preference and potential time lines for external BD? And in terms of your growth outlook, just help us understand the balance between the existing pipeline and the assets you could bring in?

A: Chris Viehbacher said they are excited about the pipeline, have restructured research for financial and talent capacity to do collaborations, look at early to late phase development, and are open to acquisitions in areas like immunology and rare diseases if financial sense. Mike McDonnell added the balance sheet is strong with $2.4B cash, EBITDA run rate north of $3B, and significant free cash flow.

Q: Priya, you mentioned that on the LEQEMBI slide, one of the important developments is the potential for blood-based diagnostics. And my understanding is that, that's coming this year. Can you walk through how important that is in terms of any bottlenecks and specifically whether that totally would be able to replace pet or how that actually works since diagnostics are a little bit complicated?

A: Priya Singhal said accurate diagnosis of Alzheimer's is important, blood-based diagnostics are moving fast, with tests like Fujirebio filed, and concordance/reimbursement being key, expecting milestones in near-term.

Q: On your spend guidance, you're saying $3.9 billion combined R&D and SG&A which is about $200 million lower than consensus. Revenues are also a little bit lower than consensus. So it offsets each other. My question is how much does the Royalty Pharma deal take out of the R&D line in 2025, specifically? I know it's $250 million in aggregate that they'll fund, but what's that relief to 2025 R&D? And then on Royalty Pharma, can we expect Biogen to do more of these off-balance sheet types of transactions with pipeline programs over the next one years to two years.

A: Mike McDonnell said the $200M from Royalty Pharma in 2025 would be a dollar-for-dollar reduction to R&D expense. Chris Viehbacher said they look at deals to take risk off the table and spread investment, but it's a one-off for now and they are always looking at 15-20 projects at a time.

Q: On SKYCLARYS can you elaborate a little bit more on the dynamics you're seeing in the U.S.? Like are there ways to accelerate patient identification to meaningfully grow revenue there? Should we be expecting this to more be an ex U.S. international growth product? And how big are the hurdles in terms of reimbursement outside the U.S.?

A: Chris Viehbacher said in U.S. they use AI, genetic testing, and multi-channel marketing to identify patients. Ex-U.S. like Latin America is growing, and in Europe, reimbursement is progressing with cost-effectiveness data, adding countries quarterly.

Q: Could you give us a little more flavor on what's happening with SPINRAZA in the U.S. and the U.S. dynamics and how much inventory is mattering what's happening with pricing?

A: Chris Viehbacher said SPINRAZA is competitive with limited patients, high dose is important for therapeutic levels, and they are developing a device. Mike McDonnell said no material inventory or channel dynamics to call out in Q4 for SPINRAZA.

Q: If you take a step back now, you got to be at a point, I would think, with ZURZUVAE, SKYCLARYS, lecanemab, to some degree, although maybe the variance of outcomes there is a little bit wider. Or at least for the next couple of years, you probably have a pretty good window into the range of outcomes for these products. So I guess taking a step back, do you feel like you can get back to sustainable revenue growth based on what you have internally and what you have high visibility into? Or how important, I guess, is getting a big upside win from the pipeline or buying growth externally via BD?

A: Chris Viehbacher said MS revenue is a headwind, but LEQEMBI has potential with catalysts to accelerate growth, there's a huge unmet need in Alzheimer's, and they see opportunity in expanding prescriber base and value proposition, with pipeline to augment growth.

Q: I want to say thank you to Mike for all your help over time, and welcome to Tim. I have two questions today, if I may. First, maybe for Priya. In a scenario where Lilly hits Trailblazer Alzheimer's three in preclinical on the progression endpoint how does that factor into your thinking around how you could accelerate time lines for AHEAD 3-45? And also your comfort with the endpoint being used there. And secondly, Chris, maybe a big picture question. It seems like where the valuation stands today around $20 billion in market cap relative to the amount paid for Reata as well as the amount of balance sheet available for an additional deal coming up. I guess, market is almost reflecting somewhat of a view that the M&A choices in the last couple of years may not have been what market was expecting or perhaps the expectations were higher. I guess how do you think about all of that? And what learnings are you taking from that into additional capital deployment? Because it will be a very significant move if there were to be a $10 billion deal again.

A: Priya Singhal said AHEAD 3-45 is ongoing, they evaluate earlier readouts and engage with regulators, and the trial is designed for amyloid load. Chris Viehbacher said they are open to M&A, look for shareholder value-enhancing deals, and are comfortable with current pipeline progress despite market views.

Q: Just I want to come back to the OpEx space. I know the company is wrapping up its Fit for Growth program and there is some moving pieces here with the royalty pharma deal. But as we think about the P&L going forward, is this kind of $3.9 billion or so OpEx space, a good rough number to think about for Biogen going forward? Or is there any other color about how to think about margin progression as we think about the next few years?

A: Mike McDonnell said $3.9B is a good baseline for OpEx going forward, and the Fit for Growth program will be completed by end 2025, with margin progression to be monitored as launches and investments occur.

Q: Hi, guys. Thank you so much for taking my question. Mike, congrats on your retirement. You will be missed. Robin. I'm really looking forward to working with you. And Tim, congrats on your first [bit in] (ph) the earnings call, I got that all in. I want to touch very briefly on the use of GLP-1s in Alzheimer's disease. Novo Nordisk has talked a lot about the EVOKE trial, high risk, high reward. What happens if that hits, and this could evolve the standard-of-care for the kind of prevention of Alzheimer's disease, Priya maybe would love your thoughts there.

A: Priya Singhal said the hypothesis is interesting, supported by some preclinical and meta-analysis, but randomized controlled trials have failed in the space, and LEQEMBI's role in addressing central pathology remains important.

Q: Hi, guys. Thank you so much for taking my question. Mike, congrats on your retirement. You will be missed. Robin. I'm really looking forward to working with you. And Tim, congrats on your first [bit in] (ph) the earnings call, I got that all in. I want to touch very briefly on the use of GLP-1s in Alzheimer's disease. Novo Nordisk has talked a lot about the EVOKE trial, high risk, high reward. What happens if that hits, and this could evolve the standard-of-care for the kind of prevention of Alzheimer's disease, Priya maybe would love your thoughts there.

A: Priya Singhal said the hypothesis is interesting, supported by some preclinical and meta-analysis, but randomized controlled trials have failed in the space, and LEQEMBI's role in addressing central pathology remains important.

Q: Good morning. Thanks for fitting as in. Let me add our congratulations to Mike Robin and Tim on their transitions. Just to drill down on the LEQEMBI short-term trajectory a little bit more closely. In Q4, revenue was up 30%, but the revenue recognized was only up $1 million. Can you talk about the dynamics behind that? Were there one-time issues? Or is there an increase in spend that we should project into 2025? And looking at 2025 trends, growth in 2024 was largely driven. Not entirely driven but largely driven by ex-U.S. is that replicable in 2025? Or are the low-hanging fruit of those markets already picked?

A: Chris Viehbacher said LEQEMBI is seeing steady progress, expanding prescriber base, and new formulations like subcu will help. Mike McDonnell reiterated LEQEMBI Q4 global in-market sales $87M, up 30% q/q, U.S. end-market sales $50M, up 28% q/q, with continued steady growth expected in 2025.