Good morning. My name is Bettina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen Fourth Quarter and Full Year 2022 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. Thank you. I would now like to turn the conference over to Mr. Mike Hencke, Head of Investor Relations. Mr. Hencke, you may begin your conference.

Thank you. Good morning, and welcome to Biogen's Fourth Quarter and Full Year 2022 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 follow the discussions related to this call. I'd 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, Christopher Viehbacher, Dr. Priya Singhal, Head of Development; and our CFO, Mike McDonnell. I will now turn the call over to Chris.

Thank you, Mike. Good morning, everybody, and thanks for joining us. It's a pleasure to welcome you here today. This is my first earnings call since joining Biogen. Now, clearly, Biogen has a strong legacy as one of the pioneers in biotechnology, and there's a strong foundation to build upon. Equally, there's an urgent need to restore growth to the company. We have a great opportunity ahead with potential launches of two important near-term products for Alzheimer's and depression, and several pipeline programs. We'll be covering a lot more about how we intend to return to growth. But first, I'd like to turn this over to Mike to provide an overview of the fourth quarter and full year financial results.

Thank you, Chris, and good morning, everyone. I will provide some highlights of the financial performance for the fourth quarter, with comparisons to the fourth quarter of 2021. Our total revenue for the fourth quarter was $2.5 billion, a decrease of 7% at actual currency and 4% at constant currency. Non-GAAP diluted EPS in the fourth quarter was $4.05, an increase of 19% compared to the fourth quarter of 2021. MS product revenue was $1.3 billion, a decrease of 17% at actual currency and 14% at constant currency, primarily due to the impact of TECFIDERA generics as well as continued declines in the Interferons and pricing pressures. We have seen a number of TECFIDERA generics launch across multiple European countries, and we expect a decision from the European Court of Justice related to our market protection by March 16 of this year. We continue to enforce our European TECFIDERA dosing patent, which expires in 2028. We also continue to enforce our IP for TYSABRI and have sued Polpharma and Sandoz to enforce those rights. As for potential supply constraints for VUMERITY, we believe we have resolved previously reported manufacturing issues at our contract manufacturer. We're securing regulatory approvals for a secondary source of supply and do not anticipate a supply shortage in 2023. Moving now to SMA. Global SPINRAZA revenue was $459 million, a 4% increase in actual currency and 10% at constant currency. In the United States, SPINRAZA revenue increased by 5% versus the prior year, indicating possible signs of stabilization. Outside the U.S., revenue increased 4% at actual currency and 12% at constant currency, with continued growth primarily in our Asian markets, partially offset by competition in Europe. Biosimilars revenue was $175 million, reflecting a 21% decline in actual currency and 15% at constant currency due to pricing pressure and net pricing adjustments. Total anti-CD20 revenue of $448 million was up 8% versus the prior year, with revenue from OCREVUS royalties increasing 19%, offset by a decline of 14% related to our profit share on RITUXAN, due to biosimilar competition. Regarding expenses, the fourth quarter non-GAAP cost of sales was $571 million, representing 22% of revenue, which includes $36 million of idle capacity charges. Eisai's share of these charges is reflected as part of the collaboration profit-sharing line. Fourth quarter non-GAAP R&D expense was $602 million, compared to $700 million in the fourth quarter of 2021. The fourth quarter of 2021 included approximately $110 million in payments related to some business development transactions. Non-GAAP SG&A was $632 million, down from $785 million in the fourth quarter of 2021, driven primarily by previously announced cost savings initiatives. We remain on track to achieve our goal of $1 billion in cost savings initiatives, and I'll comment further on this when I discuss our guidance for 2023. Our balance sheet ended the quarter with $5.6 billion in cash and marketable securities, $6.3 billion in debt, and roughly $700 million in net debt. As a reminder, we expect to receive an additional $1.25 billion over the next 15 months from the sale of our equity stake in Samsung Bioepis, including approximately $813 million due in April this year. Overall, we remain in a very strong financial position with significant cash and capacity to invest in growing the business over time. Later in the call, I will discuss our guidance assumptions and important accounting considerations for 2023. But for now, I will turn the call back to Chris.

Thank you, Mike. Biogen recently celebrated its 45th anniversary, and this company has been built upon multiple sclerosis and has hemophilia products until it was spun off as Bioverativ. We have SPINRAZA and now we need to think about transforming the business. I've spoken firsthand with numerous neurologists who consider our MS products to be the top offerings. However, it's clear that this is becoming a more competitive environment, necessitating a fresh approach to grow the business moving forward. We have an amazing opportunity with two new products. As many of you know, I come from a long background in this industry, and it is pretty rare to have the chance to launch not just one but two transformative products, specifically LEQEMBI and zuranolone. We also have existing products like VUMERITY and SPINRAZA that we can still grow, but we need to reinvigorate these brands. You may point out that Biogen's cost base is likely higher than most of its peers. Thus, we must consider a systematic alignment with new growth alternatives. Additionally, the R&D pipeline requires a closer look. We haven't received as much credit for our R&D as we'd like, and Priya will discuss products we believe have substantial potential. The neurology franchise includes progressively degenerative diseases, meaning we're automatically engaged in long-term, costly clinical studies. Some of our Phase III studies effectively serve as proof-of-concept studies, making them inherently riskier. Thus, we need to balance our R&D pipeline moving forward. Finally, I believe any company should remain open to considering external growth opportunities. While this hasn't always been a focus in the past, expanding into new areas like immunology, rare diseases, and psychiatry could provide avenues for franchise growth. As you know, LEQEMBI received accelerated approval in the U.S. in early January. On the same day, we filed for traditional approval. I'd like to credit our partner, Eisai, who quickly initiated a traditional approval filing, as well as submissions in Europe, Japan, and a rolling submission in China. The U.S. launch will initially be constrained until we obtain reimbursement, expected once we secure traditional approval. Confirmation of filing from the FDA will indicate whether we can expect a priority review. Eisai is responsible for discussions with CMS, and they hope for broader reimbursement following traditional approval, potentially as early as this summer. However, this isn't a simple pill launch; it requires a PET scan or lumbar puncture for diagnosis confirmation. We may face capacity restrictions during infusion. Neurologists are already busy treating other patient conditions, creating uncertainty around our ability to expand the patient population. Therefore, a lot needs to be done in the near term. A common discussion revolves around the CDR-sum of boxes, but I feel patient benefit relates to their daily activities. From discussions with Alzheimer’s care physicians, they emphasize questions regarding patient autonomy and quality of life, such as the ability to drive or dress independently. We observed a 37% improvement versus placebo in daily functionality, representing the true value of this product. It’s important to convey that this isn’t just about the initial sales of LEQEMBI; it's about recognizing that there is a future following this launch. Today, we will address reimbursement, safety education, and expanding PET scan infrastructure. This also opens a new frontier for both patients and healthcare providers. I remember a decade ago when many thought we'd have no effective treatments for Alzheimer’s. Biogen’s PRIME study ten years ago revived hope, and today the CLARITY study shows significant plaque removal potential impacting cognitive decline. This will stimulate further research and development, particularly regarding tau and other therapeutic areas. We are eager to explore all potential concepts, as plaque burden peaks before symptoms, highlighting the potential of early intervention. Our studies indicate that maintenance dosing might yield continued benefits. Moreover, Eisai aims to file for new treatment indications supporting maintenance therapy by the end of Q4 this year. We are looking into blood-based biomarkers to facilitate earlier diagnosis and treatment, and new formulations such as subcutaneous delivery may enhance convenience for patients. Over the next few years, we anticipate extensive advancements in treating Alzheimer's, exploring both existing and new modalities. The field of major depressive disorder is equally compelling, impacting 21 million people. Growing societal awareness around mental health is pressing, particularly for younger populations facing increased rates of depression and suicidal thoughts. Therefore, introducing new treatment options is paramount. We observe over 400 million prescriptions annually for MDD and mental health, yet there's considerable switching between therapies due to side effects and delay in efficacy. I believe zuranolone fills a significant unmet need, and we have made considerable progress. We received priority review with a PDUFA date in August. However, we won't be able to launch immediately due to DAA review. Expect a launch towards the end of the year, but there’s some controversy regarding zuranolone's trial data, with six out of seven trials demonstrating positive results. Historically, antidepressant development faced challenges, yet I find six out of seven studies quite promising. We are focused on mid-market research as we finalize the SHORELINE study, seeking to identify the right patient population for zuranolone. A large number of depression patients experience unresolved symptoms, and we aim to address this population, especially those with elevated anxiety and adherence challenges. While Biogen has achieved significant success with SPINRAZA, untapped potential exists among adult and pediatric patients. We are examining ways to improve product access through collaborations, such as with Alcyone for device development. Evaluating cost structures with an emphasis on profitability within our MS franchise interests us. Similarly, for our biosimilars business, we acknowledge its importance but aim to assess its future role. Our immediate focus is on near-term opportunities while reviewing our cost base systematically. Priya will outline our pipeline risk profile and productivity, and we also welcome Priya in her new role as Head of Development. We're actively seeking a new Head of Research as we assess external growth opportunities. With that said, let’s discuss R&D.

Thank you, Chris. We are advancing LEQEMBI with Eisai as a foothold in Alzheimer's disease, as you heard from Chris, and zuranolone with Sage, both as key late-stage assets, as well as growth drivers. With Sage, we recently announced the FDA's acceptance of zuranolone in MDD and postpartum depression as priority review, with a PDUFA date set for August 5. The priority review is granted by FDA to applications for medicines that, if approved, would offer significant improvements in effectiveness and safety of treatments for serious conditions. In addition to these developments, we're also making progress across R&D reprioritization, and today, I will highlight some aspects of our pipeline in Alzheimer's disease, lupus, and ALS. We have a broader Alzheimer's disease pipeline and recently initiated the Phase II CELIA study of BIIB080 in early Alzheimer’s. Prior clinical results from our Phase II study suggest that targeting extracellular tau alone is insufficient to affect intracellular tau tangles. BIIB080 targets tau mRNA to reduce all forms of tau protein. In preclinical studies, we observed ASO knockdown of tau in transgenic mouse models reversing tau pathology, preventing hippocampal volume loss, and neuronal death. This year, results from the Phase Ib study of BIIB080 in mild AD were promising. BIIB080 was well tolerated, with a time and dose-dependent reduction in CSF total and p-tau. Total tau continued to decline 16 weeks post last dose with a 50% reduction from baseline. Encouraged by this early data, we look forward to sharing further details at ADPD next month. The CELIA study initiated in 2022 includes multiple dosing paradigms and assessments to evaluate cognition and biomarkers in Alzheimer's disease, aiming to yield insights on tau's role. Moving on to lupus, Biogen leverages strong scientific expertise gained in developing the MS franchise. Our lupus programs include Dapirolizumab Pegol, in collaboration with UCB currently in Phase III, and Litifilimab, our wholly owned anti-BDCA2 monoclonal antibody, both of which have the potential to be first-in-class treatments for systemic lupus erythematosus (SLE). SLE is an autoimmune disease causing severe morbidity, especially in non-Caucasian populations. Litifilimab may also represent a first-in-class treatment for cutaneous lupus erythematosus (CLE), a skin-based autoimmune disease with no new approved treatments in nearly 17 years. The CLE part of the Phase II LILAC study met its primary endpoint and had results published last summer in the New England Journal of Medicine. Based on these encouraging results, we initiated the Phase II/III AMETHYST study of litifilimab in CLE, with a focus on underrepresented communities. Next, discussing ALS, the disease is a devastating neurodegenerative disorder. SOD1-ALS, an ultra-rare genetic form, affects around 330 individuals in the U.S. While the VALOR Phase III study of tofersen in SOD1-ALS did not meet the primary endpoint, we published our 12-month data from VALOR and its extension last year in the New England Journal of Medicine. These results reflected sustained reduction in neurofilament, a marker of neurodegeneration, in early treatment individuals. Additionally, we noted a slower decline in clinical and respiratory function, including strength and quality of life. With a PDUFA action date of April 25, 2023, Biogen aims to deliver targeted therapy to SOD1-ALS patients. The EMA has accepted the marketing authorization application for tofersen for review. As mentioned earlier, our aim is to rebalance the R&D pipeline. In this context, we developed a strategic framework for decision-making, focusing on pre-proof-of-concept programs. We are investing in programs like BIIB080 with high biological confidence while applying data-driven systemic methods to mitigate risk. We may discontinue some programs based on regulatory development challenges, like vixotrigine in neuropathic pain and oral ibrutinib in MS. Our approach will elevate the productivity of our pipeline and reduce risk. Our strategies include improving success probabilities in pre-proof-of-concept portfolios, enhancing translational science capabilities, and emphasizing value generation versus operational milestones. In conclusion, with key assets in Alzheimer's disease, lupus, and ALS, we believe Biogen's pipeline has significant potential for medium and long-term growth. I will now hand the call back to Mike.

Thank you, Priya. Now, I will review our guidance ranges for 2023 and outline some key assumptions before we open the call for questions. We anticipate a full-year revenue decline in the mid-single-digit percentage range compared to our 2022 results, with non-GAAP diluted earnings per share expected to be between $15 and $16. Various dynamics are expected to impact 2023 results, which I will highlight. Our guidance assumes a favorable decision by the Court of Justice of the European Union relating to regulatory data protection for TECFIDERA, expected on March 16, although predictions on the outcome are uncertain. Additionally, we expect modest in-market revenue for LEQEMBI in 2023, with commercialization expenses surpassing revenue, negatively impacting revenue results in 2023. In 2022, we amended our collaboration agreement with Eisai for ADUHELM, granting us sole decision-making authority and commercialization rights, along with a substantial majority of the economics from 2023 onwards. Eisai will receive a tiered royalty and will not share expenses related to ADUHELM in the future, resulting in two important considerations for 2023. First, we estimate approximately $150 million to $200 million in excess capacity charges due in 2023, all borne by Biogen. In 2022, we incurred $119 million in idle capacity, with Eisai reimbursing $55 million. Secondly, the absence of ADUHELM shared R&D costs is projected to increase our 2023 R&D expenses by roughly $100 million compared to 2022. Full-year operating expenses, encompassing SG&A and R&D expenses, will reflect our $1 billion cost reduction measures. We expect approximately $300 million of these cost savings to be reinvested in the launch of zuranolone and other new products, leading to $700 million in net operating expense savings relative to 2021's approximately $5.2 billion operating expenses. We continue to monitor potential supply constraints for IMRALDI, although our guidance does not assume stockouts, but that remains a risk. Seasonality dynamics also warrant attention; Q1 is typically a weaker quarter compared to Q4 for our U.S. MS business due to channel dynamics, higher discounts, and allowances. SPINRAZA experienced benefits in Q4 2022 partly due to shipment timing. Additionally, the royalty rate for OCREVUS resets annually, increasing as sales levels rise throughout the year. We expect early-year operating expenses to be higher as our cost-saving initiatives will take time to materialize. As always, we assume foreign exchange rates as of December 31, 2022, will remain effective for the year, net of our hedging activities. Please refer to our press release for more important guidance considerations. Lastly, I want to emphasize some key accounting considerations for LEQEMBI and zuranolone. With LEQEMBI’s accelerated approval in the U.S., Biogen's 50% share of net commercial profits and losses will be reflected as a component of total revenue, which we expect to be negative in 2023, as commercial expenses will exceed revenue. Outside the U.S., our 50% share of commercial expenses will stay recorded within SG&A until LEQEMBI gains approval regionally. Furthermore, Biogen's 50% share of global LEQEMBI R&D expenditures will be reflected in R&D expenses, both before and after approval. Finally, we're manufacturing LEQEMBI drug substance in Switzerland, capitalizing inventory until sold to Eisai, at which point we'll recognize minimal gross margin contract manufacturing revenue and cost of goods sold. As for zuranolone, it's a 50-50 profit share with Sage Therapeutics; prior to regulatory approval, we'll record our share of R&D and SG&A expenses net of any reimbursement to/from Sage. After U.S. approval, Biogen will account for 100% of zuranolone product revenue, cost of goods, and SG&A before sharing Sage's 50% profit/loss under Biogen's collaboration profit-sharing line. In closing, our main goal remains to return Biogen to sustainable growth. We believe the potential launches of LEQEMBI and zuranolone, alongside our existing pipeline and strong balance sheet, will help achieve this goal. We're committed to enhance our operating efficiency and create long-term value for our shareholders. Now we will open the call for questions.

Your first question comes from Salveen Richter of Goldman Sachs. Please go ahead.

Good morning, and thank you for taking my question here. Maybe a question of whether you can lay out potential timelines for the NCD reconsideration for LEQEMBI? Historical precedent suggests this could take about nine months. But when is the soonest this process could start? Could it start approval? And when will we know when the process has been initiated? Thank you.

Thanks for the question. Firstly, I'm not sure that historical precedent will truly matter here. This is an unusual situation, and discussions are ongoing between Eisai and CMS today. CMS could decide at any point, but the sense is they might wait until traditional approval, and then we'll see if there will be a registry involved. We just don’t know at this stage. What I want to highlight is a noticeably different tone in the broader community compared to the ADUHELM situation. The American Association of Neurologists has publicly supported reimbursement for LEQEMBI, and we have seen members of Congress showing a significant interest as well. The neurology community broadly views the CLARITY data as quite compelling regarding its impact. CMS, however, will make its own decision. Nonetheless, there is a growing recognition that this is a necessary medicine for a deserving population, and Eisai remains hopeful for broader reimbursement once traditional approval occurs.

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

Great. Thank you for picking up my question. Maybe a question on expense cuts. Earlier this year, you talked about expense cuts. It’s very clear that for the product portfolio, the expense base is very high. Can you talk about whether you have considered your target operating margin long-term? How much more cuts can you implement, and any timelines for communicating this given you are engaged in the business review? Thank you.

In OpEx, you've got two big components: R&D and SG&A. Regarding R&D, we are assessing prioritization and determining if we need to cut some programs. This process should be thorough, ensuring we evaluate each program and its probabilities of success, costs to completion, and more. In SG&A, most spending is directed towards the MS franchise, responsible for a significant portion of our revenue. Therefore, we must be careful about how much we reduce spending in this area, yet I acknowledge that this revenue base is declining. You will see a shift of resources towards supporting the launch. A substantial amount is allocated for prelaunch activities related to LEQEMBI and zuranolone, which are strategic products. We must strike a proper balance to not exacerbate the decline in MS sales. G&A expenses will also be reviewed this year. You will notice reductions in costs but alongside new investments. At present, it’s hard to forecast where we'll land on margins. However, we are conscious of the need for a more productive cost base than currently exists. As for ADUHELM, we're paying close attention to the EMBARK data, which will inform our understanding of amyloid-reducing antibodies' long-term treatment landscape. There is no commercial effort behind ADUHELM; our focus is entirely on LEQEMBI.

Our next question comes from Colin Bristow of UBS. Please go ahead.

Hi, good morning, and thanks for taking my question. A query for Chris: Regarding your ongoing review of the business and pipeline, can you describe potential timelines for strategic actions related to ADUHELM? Additionally, how do you approach business development targets that you might be interested in moving forward? Lastly, could you provide your insights on biosimilars?

On R&D, we have numerous ongoing projects that require thorough evaluation, especially in our Phase III studies. I believe that by summer we will start making some decisions on these projects. Regarding biosimilars, we have a strong team driving a successful business, yet Biogen’s core focus has traditionally been on innovative medicines. Balancing resources is crucial. While biosimilars represent a vital market, we will assess the right business model for our operations. We also need to ensure that our overall cost base is productive. There have been non-essential projects around that need careful review. I want to establish a definitive focus on what truly matters and drives growth for the business.

Our next question comes from Umer Raffat of Evercore.

Hi, thank you for taking my question. I wanted to get your insights on infusion capacity. You've mentioned the need for infrastructure build-out multiple times, but could we quantify how many patients, out of the 100,000 mentioned previously, exist today? Furthermore, could you assess your early AD study in the monthly arm to potentially update the label to reflect monthly dosages?

In terms of capacity, Biogen made substantial efforts for ADUHELM's launch, putting us in better position today compared to when we launched ADUHELM. However, numerous infusion centers are not abundant in terms of availability for Alzheimer’s patients. We will continue making investments in this area, and we have projected around 100,000 patients, which reflects systemic constraints. It's critical to thoroughly select the right patient population, and physicians will need time to acclimate to this new treatment approach. Thus, I expect steady and gradual progress. I cannot provide specific numbers on infusion sites at this stage, but it's a significant part of our launch strategy. Regarding the dosing data update, Priya, would you like to elaborate on that?

Certainly. To confirm, Eisai began exploring subcutaneous dosing in the Phase III open-label extension. While minimum regulatory requirements aren’t publicly detailed, it’s known that Eisai is engaging in regulatory discussions to execute this pathway. They have indicated expectations to file by Q1 2024 for subcutaneous dosing and the ongoing study demonstrates their intent to facilitate this development.

We will now take your question from Evan Seigerman of BMO. Please go ahead.

Thanks for taking my question. Chris, in your remarks, you highlighted a shift in business development. In prior years, Biogen may have been more reserved in acquiring or collaborating. Where do you specifically like to allocate business development efforts, and what size of deals do you feel comfortable with?

From a management perspective, it’s essential to consider where our expertise lies. Historically, Biogen has maintained a narrow focus, with notable strength in multiple sclerosis. It is crucial to evaluate how far we can expand our reach responsibly. In terms of business development, our focus could spread further into immunology and psychiatry as synergistic areas. I believe we can capitalize on markets that align with our capabilities. Acquisitions could include in-licensed products that are closer to market. We're now more open to exploring acquisitions as part of our growth strategy. However, as we know, M&A can be challenging, making finding truly accretive investments vital, so we'll primarily concentrate on organic growth first.

To address your inquiry regarding the size of deals without being specific: The company ended the year with $5.6 billion in cash, with more anticipated from Samsung in early Q2 this year. We also have a modest amount of debt, leading us to nearly a $10 billion cash capacity for various activities, including acquisitions.

Just to reiterate, while financial power is critical, the actual constraint lies in finding worthwhile opportunities to pursue.

We will now move to Tim Anderson of Wolfe Research.

Thank you. A couple of questions on LEQEMBI and subcutaneous therapy, particularly around what minimum regulatory requirements are to show approval in this regard. Is there a meaningful risk attached to the necessary data collection, considering the commercial future of the brand may hinge on subcutaneous therapy? I’m eager to understand this better.

I appreciate your question. Overall, I want to emphasize that Eisai initiated a subcutaneous study in the Phase III open-label extension, with all related details made public. They've initiated regulatory dialogue, but any projections on minimum requirements would be speculative currently. Eisai has shared their expectation to file for this by Q1 2024. We do believe the Clarity AD study indicates compelling outcomes worth considering as we progress.

Additionally, the capacity question remains relevant. Biogen historically made significant investments in infrastructure for ADUHELM launch, positioning us better this time. However, many infusion centers are not readily available. We project a need for continuous investment, reflecting systemic constraints and the need for patient triaging.

We will now take your question from Brian Abrahams of RBC Capital Markets.

Good morning. Thanks for taking my question. On LEQEMBI, as you consider maintenance therapy, how should we think about balancing potential price declines per patient annually versus market expansion and the likelihood of prolonged use?

Yes, when it comes to pricing, we must consider the transition from plaque removal to maintenance. The nature of dosing may lead to an annualized reduction in costs. Initially, we believe the number of eligible patients might surpass the system's capacity to manage them. While there may be price fluctuations later, demand will be less influenced by pricing initially given existing treatment challenges and patient demographics. Costs beyond the drug itself, like diagnostic imaging, contribute significantly to overall treatment expenses. Therefore, blood diagnostics may prove beneficial in eventually reducing costs. Maintaining focus on cost-effectiveness during the transition to maintenance therapy will help shape patient outcomes.

We will now take a question from Michael Yee of Jefferies.

I appreciate the insights today. You previously mentioned enhancing the risk profile and productivity of the R&D pipeline, particularly lowering risks while maintaining strong market caps. Could you elaborate on your thoughts about incorporating lower-risk projects and the potential speed at which you would act on those?

Risk management is fundamental in pharma. To mitigate risk, we can identify and pursue Phase II studies to gain confidence before moving into Phase III. It's essential to explore treatment areas with lower risk and allowed classical drug development. Moving into autoimmune or psychiatric diseases could facilitate this. Licensing products closer to market can reduce risk as well. Classical development allows us to evaluate commercial viability and strengthen funding decisions based on refined risk data.

Operator, we have time for one final question.

Our next question comes from Chris Schott of JPMorgan.

Thank you. I’d like to ask about business development. In relation to the strategic review and resizing efforts, will you prioritize BD moving forward or do you see it as a future focus beyond necessary changes? Also, in terms of your prior comments on narrow focus, will you direct BD efforts toward partnerships or acquisitions, aiming to grow in-house expertise?

For the initial half of the year, we will focus on orienting the company towards growth, evaluating cost structures and disbursements effectively. We intend to locate a new Head of Research alongside a Head of Business Development. Starting later this year, we will become more active in exploration. While the situation may not yet demand urgency in achieving acquisition targets, identifying opportunities that align with company goals is vital. Our evaluations could encompass various avenues, including collaborations, partnerships, and new launches.

Thank you all for joining our call today.

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