Good morning. My name is Jennifer, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Biogen First Quarter 2024 Earnings Call and Business 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. Today's conference is being recorded. Thank you. I would now like to turn the conference over to Mr. Chuck Triano, Head of Investor Relations. Mr. Triano, you may begin your conference.

Thanks, Jennifer. Good morning, good afternoon, good evening, everyone, and welcome to Biogen's first quarter 2024 earnings call. Before we begin, I'll remind you that the earnings release and related financial tables, including our GAAP financial measures with a reconciliation to the GAAP and non-GAAP financial measures that we will discuss today are in the Investors section of biogen.com. Our GAAP financials are provided in Tables 1 and 2 and Table 4 includes a reconciliation of our GAAP to non-GAAP financial results. We believe that non-GAAP financial results better represent the ongoing economics of our business and reflect how we manage the business internally. We have also posted the slides on our website that will be used during this call. I'd point out that we will be making forward-looking statements, which are based on our expectations. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. On today's call, I'm joined by our President and Chief Executive Officer, Chris Viehbacher; our Head and President of North-America, Alisha Alaimo; our CFO, Mike McDonnell; and Dr. Priya Singhal, Head of Development is with us and will be available for the Q&A session. Chris, Alisha, and Mike will each make some opening comments and then we'll move to the Q&A session. And to allow us to get through as many questions as possible, we kindly ask that you limit yourself to one question. With that out of the way, I'll now turn the call over to Chris.

Thank you, Chuck. Good morning, everyone. I'm pleased to announce earnings per share growth in our first quarter, marking the first time in several years that Biogen's underlying business performance has allowed us to show this growth, which is a significant milestone. While we have much work ahead of us, it feels like we are making progress as a company. I want to take a moment to thank my colleagues at Biogen for their dedication, passion, and patience during this period of change. Their efforts are reflected in our current numbers. We have focused on dedicating our resources to initiatives that create value, while also reinvesting in our future. A mentor once told me that saving alone does not lead to prosperity, and I wholeheartedly agree. Our Fit for Growth project is on track to achieve substantial savings and increased cash flow by the end of 2025. However, our primary goal has been to redesign our organization. For decades, we have concentrated on our multiple sclerosis franchise, and now we are launching four groundbreaking new medicines that require support. Despite our cost reductions and margin improvements, we are investing significant amounts into these new launches. Although our overall research and development expenses have decreased, our focus has allowed us to increase investment in our most promising assets. This is more than simply cutting costs; it's about a fundamental redesign of our organization and culture. Now, about our new launches, the one that stands out is LEQEMBI. We have observed positive quarter-on-quarter trends, with patient numbers rising 2.5 times since the fourth quarter. Our revenue nearly tripled in the first quarter compared to the last quarter of the previous year, which is encouraging. However, I recognize that this launch faces significant challenges due to the numerous changes physicians are encountering. From my extensive experience, I have seen many launches, but this one is particularly complex. In one hospital, it took three months just to approve hiring a nurse to help navigate the process. Another medical center is developing a five-year business plan just to secure access to infusion beds. Additionally, the reimbursement landscape for PET scans remains uncertain, though there has been some clarification from CMS. What is heartening to see is that many physicians are dedicating time—often without compensation—to overcome these obstacles and provide care for their patients. They recognize the urgency when they witness the adverse effects of this disease on their patients and their families. This momentum is promising, and I commend the neurologists and medical centers for their dedication to overcoming these challenges, which I believe will lead to continued growth. While the progress may not be uniform, and as Alisha will provide more details, it's important to allow time for getting protocols established. Initially, there is a tendency to start with a small number of patients to become comfortable with the processes, but we are now witnessing an increase in patient volume. Our approach to revenue traditionally reflects demand, but in this case, we've observed a clear connection between the time needed to establish these initial processes and revenue realization. We are now seeing a stronger correlation between demand and revenue growth. As our systems stabilize and physicians are prepared, we are confident enough to expand our US field force by 30%. It's worth noting that we did not fully launch until September, and there were challenges with PET scan reimbursement along the way. However, our teams at Biogen and Eisai have worked diligently to analyze our launch data from the first seven months, and we're now looking at reallocating some resources based on what's most effective. As we progress through the second quarter, we will introduce new elements to our promotional strategy. From Biogen's perspective, it is too early for specific forecasts, but we are closely monitoring new patient starts and revenue growth with optimism about the progress we’ve made. Shifting to another key growth driver, SKYCLARYS, Alisha will elaborate on our advancements in comparison to similar products. The rare disease market behaves differently, and there is often a backlog of patients that takes time to address, which shows the ongoing effort required to identify and engage these patients. We currently have 1,100 patients on therapy in the US, which is a significant milestone. I'm also optimistic about our launch in Europe. Despite the approval only coming at the end of January, we have already treated 300 patients. We navigate country-specific reimbursements, including early access programs, and have submitted reimbursement requests in five countries. While Europe may contribute more significantly to revenue in 2025 than in 2024, the initial uptake is promising. We also see potential in Latin America, with submissions in Brazil and Argentina underway. While there are no patients in Asia due to the genetic factors involved in this disease, we continue to pursue opportunities where they exist. With that, I'll hand things over to Alisha for a deeper look into these developments.

Thank you, Chris. Good morning to everyone that's able to join the call today. I'm Alisha Alaimo. And as Chuck shared, I lead our business in North America. This is a really unique period in Biogen's history with multiple first-in-class drug launches in the US, which gives us an opportunity to drive our return to growth. And for our team, it's also meaningful to support more people living with Alzheimer's, Friedreich's ataxia, and postpartum depression. We thought it might be helpful to provide a perspective on the market dynamics of the launches and share how we're seeking a tailored approach to help provide patients with access to our therapies. Let me begin with the Alzheimer's market. As Chris mentioned, we are seeing many major health systems across the country take a deliberate staged and phased approach, meaning, they are setting up their pathways to get patients started with diagnosis, treatment and monitoring. We believe we are now seeing a dynamic where some IDNs are turning the page and they are focusing on expanding and extending their model. In Q1, we saw several IDNs across regions scale their patient volume. Among our priority 100 IDNs, units more than tripled in quarter one compared to quarter four, contributing to the overall estimated patients on therapy increasing approximately 2.5 times in quarter one versus quarter four. We believe this acceleration in new patients really began to emerge at the end of the quarter. For example, more than 20% of new patients since launch were added in March. Today, among our 100 priority IDNs, more than 80% have approved LEQEMBI through their P&T process and nearly 85% of those IDNs with approval have placed an order. Chris also mentioned that we're seeing more physicians gain experience with LEQEMBI. We saw the number of unique prescribers in quarter one double compared to quarter four. We believe that we're still in the early phases of unlocking the potential to treat a high volume of patients at the priority IDNs, and I thought it might be helpful to share some examples of these dynamics at the site level. There is one large health system in the Midwest that added LEQEMBI to its formulary in July of last year. Six months later, entering Q1, this system had ordered only 300 units. However, by the end of March, they had ordered 2,700 units. Similar to the example I just shared, there is also a health system in the Southeast that added LEQEMBI to its formulary in August of 2023. Five months later, entering Q1, this system ordered about 560 units. By the end of Q1, this system ordered more than 1,750 units to treat their patients. For context, a local neurologist network in that same region ordered 3,000 units through the same time period, perhaps because they've been able to scale their processes to treat more patients. However, we believe this well-known Southeast IDN is planning to move beyond their flagship side of care to treat at multiple locations, which is another example of the expand and extend trend at the IDNs. We believe many systems just now appear to be completing the staging phase, and we think the recent trends observed support our continued belief that LEQEMBI represents a significant commercial opportunity over the mid to longer term. With access and infrastructure progressing and patient volume accelerating, we believe this is also the right time to expand the field force. Biogen leaders are working to hire a customer-facing field team, which will join Eisai. Simultaneously, to activate the patient community, Biogen and Eisai have launched new direct-to-patient and caregiver omnichannel marketing campaigns. These digital programs and point-of-care resources are focused on the already diagnosed patients, who we believe are under the care of a neurologist. With these promising signals emerging, we look forward to providing more updates in the future. Now moving to SKYCLARYS. We believe we're driving strong performance with the launch as we continue to exceed market penetration rates of most rare disease launch analogs. As of April 19, we now have over 1,100 patients on therapy. With an estimated 4,500 addressable Friedreich's ataxia patients in the US, we have achieved 24% market penetration, which exceeds our own strong SPINRAZA launch. As is typical with rare disease launches, we believe we are now moving beyond the catch-up population to reach additional patients who previously received a diagnosis of, or are suspected to have Friedreich's Ataxia. Though patient numbers may be uneven, we anticipate adding patients each month. Last quarter, we shared how we've integrated some of our sophisticated rare disease capabilities to drive improvements in access, logistics, and patient support. Notably, our market access team continued to make progress by securing favorable policies in quarter one. Today, nearly 80% of all US pharmacy lives now have SKYCLARYS reimbursement. These patient support and access efforts are critical to help patients start therapy as soon as possible and remain on treatment for the long term. With a meaningful foundation of patients on therapy, we are focusing on two key areas in this next phase of our launch. First, educating community neurologists and PCPs about Friedreich's ataxia and SKYCLARYS, and second, engaging additional appropriate patients. I'll begin with our focus on HCPs. Remember with Friedreich's ataxia, in addition to patients being concentrated at the top centers of excellence, we believe they are also being treated in the community. To support these physicians, we've expanded our field footprint and we are using AI to analyze data to help reach the HCPs who may have untreated patients, with insights into the relevant sites of care and when patients last engaged with their physician, we believe we can help more patients even sooner. And with genetic testing, we anticipate patients can confirm a potential diagnosis and determine if SKYCLARYS is a treatment option. As far as our patient activation focus, we are encouraged by real-world experiences that patients are sharing on social media as, in our experience, these stories can help other diagnosed patients. Many of these stories about the impact of SKYCLARYS include reports of slowing disease progression and in some cases, even an improvement in their symptoms long term. In addition to these organic stories, we anticipate launching our SKYCLARYS social media campaign soon. So, we believe we're off to a strong start, but we know there are more people living with Friedreich's ataxia that we can help, and we look forward to supporting them, which now brings me to ZURZUVAE. As Chris mentioned, we are encouraged by the performance of the launch to date, and we think we are seeing several positive trends with providers, patient experience, and reimbursement. First, let me begin with providers. Across multiple physician types, we believe many providers are demonstrating an urgency to treat. Notably, OB-GYNs led overall prescribing in quarter one, which we believe is encouraging as they are often the first to see PPD patients. Furthermore, breadth of adoption has continued to grow. In March, nearly double the number of HCPs prescribed ZURZUVAE compared to just January. We've seen that some early prescribers require only a few calls before they treat. Keep in mind that ZURZUVAE is a scheduled product available through a specialty pharmacy. While we believe psychiatrists are generally familiar with working with specialty pharmacy, this could be a new process for many OB-GYNs. We're working to educate these providers on the steps required so that they can support their appropriate patients. Second, some HCPs with early experience with ZURZUVAE have shared that some of their patients reported significant improvement in depressive symptoms within days of starting treatment. Several patients are sharing their personal 14-day treatment experiences on platforms like TikTok, and we believe their courage to tell their story will help educate other women living with postpartum depression. Third, we believe we're making good progress with government and commercial access. Many payers already have policies in place, the majority of which have been favorable, while some others continue to cover ZURZUVAE even without formal policies in place. Two of the three national pharmacy benefit managers are providing coverage for ZURZUVAE without overly burdensome restrictions. We are in active discussions with the third national PBM as we await their decision. And while Medicaid tends to take longer, almost half of the states, including several of the largest, accelerated reviews into quarter one, which we believe is unusual for a process that can typically take-up to a year after FDA approval. We are encouraged that approximately two-thirds of Medicaid lives with published policies appear to have minimal access restrictions. We anticipate the remaining states will review coverage throughout 2024, and we will continue to support their reviews as much as possible. Before handing it over to Mike, I want to underscore that we have an important responsibility to help people living with Alzheimer's, Friedreich's ataxia, and postpartum depression. And we are working with urgency to help these patient communities. We believe we're making significant progress in that mission and we look forward to continuing to share updates with you. With that, I'd like now to pass it over to Mike.

Thank you, Alisha, and hello to everyone. I'd like to start with a high-level overview of our financial profile and how we are seeing this progress in the context of our Fit for Growth program. We maintain a sharp focus on improving profitability as we endeavor to return the company to not just EPS growth, but revenue growth as well. Please note that any financial comparisons that I make are versus the first quarter of 2023. Regarding our top line, our four recent launches contributed revenue in the first quarter, which more than offset the 4% decline in our MS business. And as we noted during our previous earnings call and at a recent webcast investor conference, we expect that this year's revenue will be skewed more towards the second half of the year, and we expect this to be due to both the timing of shipments for SPINRAZA outside the US, as well as the expected growth profiles for our recently launched products. On gross margin, we saw improvement of 5 percentage points in the quarter as our revenue mix has shifted. This is due to increasing high-margin product revenue replacing lower-margin contract manufacturing revenue. We also had $45 million of idle capacity charges in the first quarter of 2023, and none in the first quarter of 2024. Our R&D prioritization and Fit for Growth initiatives had a clear impact on our non-GAAP R&D and SG&A expenses, which we refer to as core OpEx during the quarter, and that resulted in a 13% decrease year-over-year. These savings contributed to meaningful growth of our non-GAAP operating income of 24% year-over-year. Our operating margin was 31% in the quarter as compared to 23% in the first quarter of 2023. While these are encouraging improvements so far, we believe there is still more work that can be done to continue to improve these metrics. Now, a bit more color on revenue dynamics during the first quarter. Total revenue was $2.3 billion, which was a decrease of 7% at actual and constant currency. Our MS franchise revenue declined approximately 4% driven by competition and the usual channel seasonality that we see in the first quarter. Within MS, VUMERITY revenue grew 18% and benefited from global patient growth as well as some favorable channel dynamics during the first quarter. Regarding TECFIDERA in the EU, we have now seen most generics exit the market, which drove ex-US growth of 5% for TECFIDERA this quarter. We continue to believe we are entitled to market protection in the EU until February of 2025. A quick double-click on our rare disease revenue for the quarter. SKYCLARYS delivered $78 million of revenue, including approximately $5 million in Europe, where we have launches in several countries underway. For SPINRAZA in the US, revenue was up 1% in the quarter, and we remain encouraged by the resilience here. SPINRAZA revenue outside the US declined 35%. The majority of this year-over-year decline was due to shipment timing in certain emerging markets. We continue to generally see stable patient numbers globally, and we expect the shipping dynamic outside the US to largely normalize throughout the remainder of 2024. We also saw some modest negative impacts from competition and foreign exchange in the quarter. For the full year 2024, we expect global SPINRAZA revenue to decline by a low-single-digit percentage. ZURZUVAE delivered $12 million of revenue, which we believe is inclusive of some channel stocking in anticipation of increasing demand, which is common for any new launch. Lastly, contract manufacturing revenue was notably lower year-over-year, and as we reflected in our guidance for the full year, we continue to expect contribution from this line to be significantly lower than last year due to completing a number of batch commitments in 2023. First quarter non-GAAP cost of sales was 22% of total revenue, and that was an improvement of 5 percentage points. This improvement was driven by a more favorable product mix, as revenue from new product launches replaced lower margin contract manufacturing revenue, and it was also related to having lower idle capacity charges. We did not have any in the first quarter of 2024. First quarter non-GAAP R&D expense decreased $124 million, driven primarily by savings achieved from Fit for Growth, where we remain on track to achieve cost savings of $1 billion gross and net of investment by the end of 2025. We also saw savings as a result of our R&D portfolio prioritization, which has had a meaningful impact as we discontinued some programs and focused our spend on areas we believe have a higher probability of success. Non-GAAP SG&A expense decreased approximately $33 million in the first quarter, primarily due to $50 million of G&A-related cost reductions realized in 2024 in connection with our Fit for Growth program. This was offset by an increase in operational spending on sales and marketing activities in support of the LEQEMBI and SKYCLARYS launches. I'll also note that the prior year included $31 million related to the termination of a co-promote agreement for our MS products in Japan. All of this together contributed to non-GAAP operating income growing 24%, with non-GAAP operating margin now above 30% and improving and non-GAAP EPS growth of 8%. A brief update on our balance sheet. We ended the quarter with approximately $6.5 billion of debt, $1.1 billion in cash and marketable securities, and net debt of roughly $5.5 billion. As of March 31, 2024, the $6.5 billion of total debt included $250 million of the $1 billion 2023 term loan established at the time of the Reata acquisition. As of March 31, 2024, we had repaid $750 million of this $1 billion facility. The remaining $250 million is expected to be repaid during the second quarter of this year, earlier than our original expectation. This cash and marketable securities figure does not include a $437 million payment from Samsung, which we received earlier this month. We continued to generate strong free cash flow during the first quarter with approximately $507 million of free cash flow. Overall, our balance sheet remains in a strong position, with increasing capacity to invest in growth initiatives. Regarding our strategic review of the biosimilars business, at this point, we have not received an acceptable offer from a third-party. Our process remains ongoing and we will remain disciplined as we continue to explore all options including retaining the business. Next, I'd like to discuss our full year 2024 guidance ranges and assumptions. We are reaffirming our expectation of full-year 2024 non-GAAP diluted earnings per share of between $15 and $16, which reflects expected growth of approximately 5% at the midpoint of the range compared to 2023. All of the previous assumptions related to our guidance, including those on this slide, remain unchanged. I'd like to remind you that we have potential R&D success milestones or opt-in payments associated with the upcoming clinical data readouts, and we have made an allowance for some of these potential payments in our guidance. Of course, whether or not they are paid will depend on the data and our resulting decisions. We just announced the completion of a sale of one of our two priority review vouchers for $103 million. At this point, we expect to earmark these proceeds for business investment or to support business development opportunities as they arise. In closing, we remain committed to our number one goal of returning Biogen to sustainable top and bottom-line growth and creating long-term value for our shareholders. We will now open up the call for questions.

Thanks, Mike. Jennifer, can we go to questions?

Thank you. Your first question comes from the line of Eric Schmidt with Cantor Fitzgerald.

Oh, hi. Thanks so much for all the updates and for taking my question. I guess on LEQEMBI, maybe for Priya, we had a couple of updates in the last month or so, the EMA delay on the CHMP recommendation. And also, I know this is your partner's doing, but Eisai announced that they couldn't submit for the subcutaneous approval until they finished the immunogenicity study. I was hoping you could just update us on timelines for both of those initiatives going forward? Thank you.

Yes. Thanks, Eric. So maybe I can just start off by saying that we are working with Eisai to really provide patients with the optionality of a subcutaneous formulation. Our approach is entirely data-driven. We were very encouraged to see the bioequivalence we met last year and we shared that at CTAD. This was the most important milestone. Thereafter, we've engaged with the FDA. Currently, just to characterize how we are approaching this, we've split our strategy for subcutaneous formulation. First and foremost, we are working to submit a rolling submission for subcutaneous autoinjector for maintenance. This we're going to do at earliest. Eisai has already submitted a fast track application. We're awaiting that. And as soon as we get it, we will make the submission, while we continue to generate the data for the three-month immunogenicity that the FDA has required. Second, we believe it's in the interest of patients to optimize dosage, and that will lead to more convenience. That is currently ongoing this year. In terms of timelines, if we get the fast track for subcutaneous maintenance, we will file immediately for rolling review, and that we expect would be in this year even if we don't get the fast track because we have completed the three-month immunogenicity data by Q4. Second, for the subcutaneous induction therapy, we expect that we would file by the first quarter of 2026. That is what Eisai has already communicated in their investor comments early March. I'd also like to remind us that we completed our intravenous maintenance filing by Q1 2024 as we finalized.

Thank you, operator. Next question, please.

We'll go next to Paul Matteis with Stifel.

Good morning. Thank you for taking my question. I would like to know your updated view on business development regarding capacity, therapeutic area, stage of development, or commercial aspects. Additionally, how does the uncertain yet promising trajectory of lecanemab affect your willingness to move forward now versus possibly waiting until 2025? Thank you.

Thank you, Paul. This year, our focus will be on business development to acquire new assets, particularly in early-stage research and development. Although we have branded ourselves as a neuroscience company, neuroscience is inherently high-risk. We often lack a complete understanding of the underlying disease biology, and the diseases develop slowly, resulting in lengthy and costly trials. Proof-of-concept studies are not typically feasible in Phase 2. While we remain dedicated to neuroscience, I believe it is not sufficiently diversified for a company of our size. Last year, we indicated our interest in exploring opportunities in rare diseases, where we possess significant commercial capabilities. There are unique commercial needs, such as supporting diagnosis and navigating payer challenges, as well as locating patients, and we have various tools to address these. Additionally, we have been part of the immunology field since the beginning, with multiple sclerosis being an autoimmune disease. We intend to leverage licensing collaborations to expand our presence in this area. Regarding our balance sheet, while we would consider something extraordinary, I don’t foresee any efforts towards acquisitions this year, especially not of significant size. Mike, perhaps you can provide insights into our balance sheet capabilities.

I would just like to mention that our balance sheet is in a strong position. By the end of the first quarter, our net debt was around $5 billion after accounting for the Samsung payment and the term loan paydown we'll make in the second quarter. We generate approximately $3 billion in EBITDA, which puts our leverage between 1.5 and 2 turns. We could potentially take on another turn of leverage for an attractive opportunity, at least temporarily, and we generate a couple of billion dollars in free cash flow each year. Looking ahead to 2024, we might have a capacity in the range of $4 billion to $5 billion for interesting opportunities. If we were to consider something similar to Reata, that might make more sense for 2025 or later.

Thanks, Mike and Chris. Can we take the next question, please?

Yes. We'll go next to Salveen Richter with Goldman Sachs.

Good morning. Thanks for taking my question. For SKYCLARYS, could you speak to the 2024 outlook and any bolus dynamics that have impacted this? Specifically, you've talked about being 24% US market penetration. How are you thinking about peak penetration in the US and then the expectations for pace of uptake in Europe and net pricing there? Thank you.

Alisha, you want to take the US and I can follow up with Europe?

Yes. I think when you look at the US and the market penetration, and you probably saw in the analogs on the slide that the launch has gone very well thus far. As I also said, we've made it through the catch-up population. We have a lot of good things in place right now that we are launching in parallel to identify and hopefully get to the rest of the population. The way in which we think about this market though is, we do have two sets of patients. You have a set that are highly engaged with their physicians, and you have another set who haven't been engaged, probably over the last two to five years. We have enough data and analytics to understand exactly where these physicians are and how the patients have moved through them. With that, we are identifying a lot of these offices, especially in the community who could have a patient or two that might be diagnosed with general ataxia, but not Friedreich's. And so, what I referred to earlier on the call is expanding the field force footprint. We have a very targeted approach to these offices in order to increase the market penetration. As you see with something like SPINRAZA, we've also performed very well and have driven quite good market penetration with that product, even though there are competitors in the marketplace. With SKYCLARYS, with no competitor in the market, we expect to continue over the next several years to penetrate this for as far as we can go. We know that there are approximately 4,500 patients that could have Friedreich's ataxia. What we're doing is planning everything that we can to get to as many of them as quickly as possible.

Thanks, Alisha.

Yes. And on Europe, in some ways the single-payer systems actually are really ideal for rare diseases. A lot of patients in the US, even if you have reimbursement, even if you have insurance coverage, there are an awful lot of hurdles that the US healthcare system imposes upon patients. A lot of those, we don't really see in Europe. I think we're seeing a rapid uptake. Again, there's a catch-up on population. So, there's a difference between patients on treatment and revenue-generating patients. So first, we have the commercial launch in Germany because we can get reimbursement relatively quickly. Other countries will come online as we go through the individual country reimbursement processes, but our objective is actually to build up the patients. So, there are a number who are on free drugs at the moment through these EAPs, some of the EAPs you can charge for. It's going to be a little lumpy as we look at the revenue line. But I'd say we're extremely encouraged by the uptake of patients. In Latin America, that could well be a story for 2025. You may see our first launch in Brazil in early part of 2025.

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

Yes. We'll go next to Umer Raffat with Evercore.

Hi, guys. Thanks for taking my question. I have one for Priya, if I may. I know there's the late-stage lupus readout with the CD40 ligand antibody this summer. I also realize the time point on this readout is week 48 instead of week 24. I guess my question is, knowing that there wasn't a clear dose-response on efficacy in the prior trial, could you speak to how the B cell impact was different between doses and whether the prolonged duration could actually help the B cell impact on this upcoming readout? Thank you.

Thanks, Umer. We have looked at the Phase 2 study very carefully, and we have decided and included the 48-week endpoint on BICLA for the Phase 3 study. Ultimately, we're looking for a meaningful change on the primary endpoint and the key secondary endpoints for SLE such as severe flare prevention and patients achieving low disease activity. We also think that the BICLA is a sensitive, clinically meaningful composite measure of SLE disease activity, and requires disease improvement across all body systems with moderate or severe baseline activity without worsening and the need for escalation in background medications. We modified the trial, we refined the population, and we think that this is going to be really important as we kind of look forward to the readout. The other piece to keep in mind is that we considered how we can modify the population for this study and get to an answer quickly to potentially bring dapi to patients. I hope that answers your question.

Thanks, Priya. Let's go to the next question, please.

We'll go next to Michael Yee with Jefferies.

Hey, guys. Thanks. I wanted to revisit SKYCLARYS comments. I know you said you were planning to add patients month-to-month. Can you just talk about the trajectory of SKYCLARYS this year as it relates to also any offsets like discontinuation rates, et cetera, how does that factor into it? And also, will you book Germany revenues this year? So just talk about the dynamics of revenues for SKYCLARYS. And if I may sneak in one clarification. Priya said subcu induction filing for LEQEMBI Q1 2026. I just wanted to clear that's what she said? Thank you so much.

Yes. The outcome and the filing will be in that period, but we'll communicate more on this once we optimize the dose and move forward.

Yes. So for SKYCLARYS, it is quite complicated month-to-month because you have patients, obviously, that are getting via the start forms, which I will say for the highly engaged population we are pretty much maxing that out now. We absolutely know who they are and we've captured them through the physicians. But then, you're also going to have a discontinuation rate as you have noted, and you're going to have patients that are being pulled off the start forms, putting on product. And of course, you may have them miss a dose or two, right? So then, there's compliance. Month-to-month, it will be lumpy because you can say you add 50 patients, but then you have other dynamics going on in the patient population. What our outlook is for the year, which I can't give you a specific number, is that we are going to continue to add every single month. We are able to find those patients in the community, and there are other puts and takes in those numbers. But at the end of the day, we will ensure that we are still leading the rare disease analogs and that we're going to generate market penetration.

Yes. In Europe, we are currently generating revenue in Germany and have also launched in Austria and the Czech Republic. In certain countries, we can charge for the early access programs in Europe, which will contribute to revenue. However, you can expect more comprehensive revenue from the entire EU region in 2025, with some revenue contributions from specific countries in Europe in 2024.

Great. Thanks, Chris. Let's go to the next question, please.

We'll go next to Colin Bristow with UBS.

Good morning and thanks for taking the questions. Maybe one on the LEQEMBI commercial setup. So, one investor concern and important feedback we've been hearing from physicians is around, there being less sales and marketing presence than perhaps had been expected. I heard in your prepared remarks you're saying you expect a 30% increase in the US footprint. Are you able to sort of quantify the current US commercial footprint? And was the 30% increase always planned or was it based on some review that the current footprint wasn't adequate? Thank you.

Thank you very much for the question. If you really take a step back and look at how we strategically looked at this launch, we always said that we were going to do in a stepwise approach. We knew from the beginning that sites were going to take a while to get up and running. We had to wait for several indicators from CMS giving full approval and NCD being overturned for PET. With that in mind, we didn't want to go out of the gate with a large field force that wasn't able to impact or penetrate the market. So instead, we went in with a very focused approach, targeting the top accounts that we think handle the majority of the diagnosed patients, especially that are under neurology care. Once the market gets to a place where we think it's ready for expansion, we will expand. To your comment about physicians coming back saying they're not seeing a lot of sales efforts, we have to have context about getting these sites up and running takes a lot of effort. You also don't want to have multiple different people going into these accounts to support. We've been very focused on getting the large IDNs up and running. Some of these centers that have come forward that could move quickly, we got them up and running. Now, as you see the expansion take place with the 30%, we are going to focus mainly on the large IDNs that are now opening up their expand and extend satellite offices, allowing a larger cohort of patients to come through for diagnosis and treatment. With this next phase of a build, which we believe we've done a lot of analytics behind it, and we've had a lot of third parties weigh in on what the appropriate sizing is, we and Eisai believe that this is going to be the right footprint to drive the next acceleration of growth.

Let me just turn it to Priya for a clarification back to Mike Yee's question on subcu.

Thank you. I just wanted to clarify that the outcome will be by fiscal year, specifically Eisai's fiscal year 2025, which corresponds to Q1 2026 for the subcutaneous induction. This could vary depending on factors such as the sBLA and possible prioritizations, which might cause shifts in timing, but that is the information provided by Eisai. I wanted to reaffirm that.

So, the outcome and not the filing?

Yes.

Thanks, Priya. Let's move to the next question, please.

We'll go next to Brian Abrahams with RBC Capital Markets.

Hi there. Good morning. Thanks so much for taking my question. With regards to LEQEMBI subcutaneous, on the FDA request for immunogenicity data, I'm curious if you have a sense as to what drove that request. Your level of confidence that the PK will be linear using half the subcutaneous dose? And then, when are you proposing that patients in their course of treatment should transition from IV to subcutaneous maintenance? Thanks.

Sure. Thanks, Brian. Overall, we have tested the 720 milligrams in the naive patient population that was part of the Clarity AD open-label extension sub-study for subcutaneous. Additionally, we have modeling data, and we are proposing 360 milligrams as the weekly maintenance dose. The FDA is requiring more immunogenicity data, which we believe is a reasonable request, and we are already in the process of generating it. We don't expect issues with bioequivalence; it's mainly about the immunogenicity and generating data for patients being tested for this. Regarding the timing for transitioning from IV biweekly to weekly, now extending to every four weeks, we will first focus on all IV maintenance before discussing subcutaneous maintenance in a systematic way. I hope that makes sense.

Thanks, Priya. Let's move to the next question, please.

We'll go next to Jay Olson with Oppenheimer.

Oh, hey. Thanks for providing this update. It seems like compared to previous quarters, you're focusing more on your three commercial launches and relatively less on the R&D pipeline. Is there any particular reason for that shift in focus? And how much more work do you plan to do to optimize your R&D portfolio? Thank you.

I'll begin. We have four data readouts expected around midyear. Initially, we anticipated having more data, and it makes sense to enhance our R&D efforts once we have that information. From a prioritization standpoint, we've accomplished ensuring that our projects are either strongly supported or pending data outcomes. These projects are currently in progress, and given the nature of neuroscience, we must wait for the results. We aim to be much more disciplined in deciding whether to proceed with or halt projects. Our criteria for go/no-go decisions are well established. Our next focus is to build out our pipeline, as mentioned earlier, to diversify our business further than we have previously. Priya is collaborating with Jane to explore additional opportunities for pipeline expansion from outside sources. Priya, do you have anything to add?

Thanks, Chris. You covered it. That's exactly right. We are very excited about our four readouts. We are preparing for them. We have already worked through go/no-go criteria. We continue to remain very excited about the rest of the pipeline that's in mid and late-stage, particularly our anti-tau ASO BIIB080, as well as our two Phase 3 programs in SLE, litifilimab as well as dapi that we just talked about, and with litifilimab also in cutaneous lupus. We have a number of projects in early phase development, and we're trying to be very disciplined about making sure that we make evidence and data-based decisions.

Thanks. Next question, please.

We'll go next to Chris Raymond with Piper Sandler.

Thanks. Just maybe a strategic question on your biz dev strategy. So, Chris, I heard your comments around diversifying away from neurology. You guys have been saying that for a while and your deals are focused on areas other than MS. But there is actually, if you look across the industry, some decent early innovation in MS. Even with your business on decline, our checks still indicate that Biogen remains a trusted company and there's an awful lot of value, I would argue, with that market presence. I guess maybe just the question here strategically is, is your activities in business development, is that due to your view of the need to diversify away from MS strategically? Or is it a view that you just haven't seen an early asset worth licensing, or is there some other underlying dynamic of the MS market that has led you guys to prioritize other areas? Thanks.

Yes, well, there's a little bit of a lot of the above in there. I think the first is, we haven't abandoned MS. We do have programs in research early. The unmet need in MS has really narrowed. It's really the progressive form, which is a very tough indication to pursue. We have a number of programs in ALS. In fact, I think the fact that QALSODY was approved has proven to be an enormous scientific achievement. It may not be a major financial achievement, but this really opens up the field to having a biomarker where you can tell whether something is working or not in ALS. We have a number of programs in ALS, Huntington's. We have a program in Parkinson's, as you know. We've got TAU, which I think between TAU and lupus, we see as high conviction programs within the company. We feel we are very well-placed, not just in MS but in neurology. The reality is that we sit there with programs that are very difficult to predict, very expensive, very long-running. When you actually look at the ability to do external deals, that field is also very narrow. There's just not that many people working in the CNS space. So we're by no means abandoning it. The fact that we go after these really tough diseases is a source of pride within Biogen. I continue to be amazed at the capability and talent we have within the organization. That said, we need to have more predictable results out of R&D. We do have that capability within the company. I don't see us ever moving left-turn into oncology, but I believe we have legitimacy in rare diseases and expanding into immunology. What we've been doing in MS and lupus is really an indicator of that. We're going to continue to branch out, expanding our opportunity set for collaboration, and not just diversifying our portfolio.

Thanks, Chris. Can we take our last question, please?

Yes. We'll go next to Terence Flynn with Morgan Stanley.

Great. Thanks for taking the question. Maybe a two-part on LEQEMBI. Just wondering, obviously, you talked about the number of unique prescribers more than doubling this quarter. Just wondering how much more breadth you're expecting from the field force expansion here as we think about the forward through 2024? And then, any early insights on duration of treatment that you're seeing so far? Thank you.

My outlook for the remainder of the year considers the various phases that these Integrated Delivery Networks are experiencing, including the smaller accounts that tend to move quickly within the community. When we take a broader perspective on the IDNs, we received full approval in July. After that, it took about six to eight months for these larger systems to get organized, following the staged and phased approach I mentioned earlier. They are now starting to open facilities for diagnosing and prescribing, which I believe will lead to an increase in the number of physicians prescribing, and this trend should continue throughout the year. If you analyze the number of physicians we are targeting versus those who are currently prescribing, there remains significant room for growth. I expect this trend to persist, especially as our field force becomes active in these large IDNs. While I have referred to the Priority 100, it's important to note that we target many more than that. Many other IDNs are also involved in prescribing and expanding their efforts. Regarding the duration of treatment, an interesting point has emerged from our discussions with many of these prescribing sites. Physicians communicate specific expectations to patients about this therapy, indicating that patients should come in every two weeks for their IV infusion and remain on the product. We are currently receiving feedback from physicians that reinforces this, as evidenced by the data we are observing. Therefore, the plan is to keep patients on the product. There are ongoing questions about duration, but in the absence of definitive data, physicians are continuing to maintain patients on treatment.

Right. Thanks, Alisha, and thanks to all of you for joining us today for the call. The IR team, of course, is available for follow-ups. Have a good rest of your day.

This does conclude today's conference. We thank you for your participation.