Good morning. My name is Cynthia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen Third 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 Dr. Stephen Amato, Senior Director of Investor Relations. Dr. Amato, you may begin your conference.

Thank you. Good morning, and welcome to Biogen's third quarter 2024 earnings call. During this call, we'll make forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review. Our earnings release and other documents related to our results, as well as reconciliations between GAAP and non-GAAP results discussed on this call, can be found in the Investors section of biogen.com. We have also posted the slides on our website that will be used during this call. On today's call, I'm joined by our President and Chief Executive Officer, Chris Viehbacher, Dr. Priya Singhal, Head of Development; Mike McDonnell, Chief Financial Officer; as well as our Head and President of North America, Alisha Alaimo who will be available for Q&A. We will make some opening comments, and then we'll move to the Q&A session. To allow us to get through as many questions as possible, we kindly ask that you limit yourself to one question. I will now turn the call over to Chris.

Thank you, Steve. Good morning, everyone. I'll start first by thanking you, Steve for stepping up as Interim Head of IR and done a great job of preparing us for this quarter. Also, earlier this week, we announced the retirement plans of our CFO, Mike McDonnell, and also the appointment of his successor, Robin Kramer. But Mike is still very firmly in the saddle as CFO, and we will be recognizing his significant contribution to Biogen with the fourth quarter earnings call later. I think Biogen has made significant and very strong progress over the last two years. And I do think the company is well positioned for the future. Our launches are progressing well with good sequential quarter-over-quarter growth. Our cost base has been significantly reduced, but more importantly, a value-for-money approach to spending, I think, has been embedded in our culture. The acquisitions we've done to date have been well received and are already creating value. And I think we have a strong late-stage pipeline emerging. So if we turn first to the launches, let's start talking about LEQEMBI. Now although LEQEMBI revenue in the US continues to be below the expectations of our collaboration and the prescriber base has not expanded to the extent that we had anticipated, global revenue still grew by 66% in the third quarter as compared to the second quarter and we've got continued uptake outside the US and new prescriber growth of nearly 40% in the US. The collaboration continues to refine the commercial strategy, and we are seeing benefits from an increase in our sales force, who started out there in the field from the first of September. We continue to evaluate opportunities to potentially accelerate our business. Now we've continued to see some health care systems expanding and extending their treatment sites in the US. More recently, we're starting to see large infusion networks activating in high-population geographies to help absorb patient demand. We've been encouraged by the rate of uptake outside the US, including Japan, where revenue nearly doubled from the previous quarter. I think there's been terrific launch activities in particular, Japan and China. It does seem like a single-payer system has also enabled that kind of growth. Overall, we expect continued sequential growth quarter-on-quarter for LEQEMBI over the near term. We believe there are a few future potential catalysts that could accelerate uptake, including the potential availability of IV maintenance as soon as next year, a subcutaneous formulation for maintenance and eventually induction, and more widespread utilization of blood-based diagnostics. Just to underline how much of a lift this is for physicians, some of you may have noted an opinion piece in JAMA Neurology, dated October 14, that was written by Katherine Possin of UCSF, Jeff Burns at the University of Kansas, and Brent Forester at Tufts. They talk about the unprecedented time of advances. But equally, they say the challenge and the importance of translating scientific advances in diagnostics, treatment, and care into practice in a timely and equitable manner cannot be overemphasized. Innovation at the clinic health care system and policy levels is necessary to equitably translate advances at scale. So we continue to believe that this is going to be an important market. But again, we don't believe that we have a demand issue. It is just taking the healthcare system time to actually adapt to treating this number of patients. Turning to SKYCLARYS, we saw increased demand globally as we broadened our footprint, particularly in Europe. SKYCLARYS is now generating revenue from both commercial and other paid mechanisms in 15 markets outside the US. This includes a number of countries in the EU, where we are seeing increased demand quarter-over-quarter. At this point, I'd like to say there is a difference between how we generate revenue in the US and how we're seeing demand develop in Europe. In the US, our revenue is rising at the rate we find patients. In Europe, we are actually already out there commercializing the product. We have a number of early access programs in place. But the strategy for many products in Europe is to get patients on board while you're negotiating with governments to get reimbursement. At some point, then the governments reimburse those patients, and you have an immediate population of patients ready to go because they are already on treatment. So when you're looking at the progression quarter-on-quarter, the ex-US piece is not going to be a reflection of growing demand, but it's going to be a reflection of at what point in time do we get reimbursement from governments. But I can tell you that we are adding patients every day, every week in Europe at a pace that has exceeded our expectations. We are looking to expand access to more patients, and there are now 11 regulatory filings that have been submitted globally. So we're looking now beyond the US and Europe, and they could start generating revenue as soon as next year. ZURZUVAE continues to outperform our expectations commercially in the US, where we saw $22 million of revenue in the third quarter, an increase of 49% over the second quarter, driven in part by a 40% increase in patients this quarter. I think the team has done an outstanding job with this launch. In all of the cases we've been talking about, LEQEMBI, SKYCLARYS, and ZURZUVAE, I'd just remind everybody that these are not pre-existing markets. We are building these markets in each case. And that always takes longer than having incremental innovation where you go in and you just are looking to take some market share from a pre-existing market. Our goal is really for sustainable growth. There’s short-term and medium-term growth. When I came to the company, I had really three major objectives. One is to put Biogen back onto a sustainable growth pattern for revenue, to build a pipeline that can sustain that growth for Biogen well into the 2030s, and also to build a pipeline of leaders who will take this company to even more success in the 2030s. So as we look at the pipeline, I have to say, I think we are very excited about what we see emerging. Again, we are Biogen. We don't do incremental innovation. But I think there are some really interesting products that we feel very good about because, unlike many products in the past with Biogen, where we go into Phase 3 and we don't really know whether they're going to work, I think we've seen an awful lot in biomarkers, data, and other indications that suggest we have growing conviction in these assets. BIIB080, one of the things that excites me is that although this is an intrathecal, as Priya will say, we recruited early on this one and were finished recruiting. From someone who's had commercial experience for over 35 years, when I see a clinical trial recruiting early, particularly in a competitive space where there are existing therapies, that augurs well for the product downstream. Dapirolizumab, we saw positive Phase 3 results, and I'd like to congratulate Priya because she had already thought about this and worked with UCB, and there's actually a Phase 3 protocol ready to go. We'll be starting Phase 3 very soon. Lupus is an area of huge unmet need, and we have not only dapi, but we have litifilimab in two indications. Behind that, we also have felzartamab in lupus nephritis. In felza, we had some very encouraging data at San Diego in IgAN, and we've had breakthrough status on AMR. This is a game changer for us in terms of our pipeline because, again, we have Phase 2 data that look very compelling. We all know there are no guarantees in pipeline development. But at least we have, I think, reason to believe that these products could come to market and make a big difference. When we start to look at peak revenue for each of these products, the cumulative of all of these, if they made it to market and got approved, have peak sales cumulatively of about $14 billion. When you consider that our pharma business today is about $7.5 billion, this late-stage pipeline could really transform Biogen over the longer term. But I shouldn't be talking about the pipeline. The real expert is Priya. So with that, I'm going to turn it over to Dr. Singhal.

Thank you, Chris. Over the last two years, we have focused heavily on augmenting our pipeline, as Chris noted, with an eye towards transforming innovation into novel and impactful medicines. As a result, I believe our current pipeline has several programs that are both supported by encouraging clinical data and have the potential to deliver meaningful value to patients. This includes dapi in SLE, litifilimab in both SLE and CLE, Felzartamab in multiple immune-mediated diseases, and our tau ASO BIIB080 in Alzheimer's, as Chris suggested. While advancing these programs remains our top priority, we are also working to implement an acceleration strategy across the broader portfolio to expedite decision-making while continuing to focus on execution. An important example of this is BIIB080, where we recently completed enrollment in the amended Phase 2 trial design and now expect a readout in 2026. Additionally, with the positive Phase 3 results last month, we are moving very quickly with our collaboration partner, UCB, to initiate a second Phase 3 study for dapi in SLE this year. We are also implementing innovative new clinical development strategies to enhance clinical execution and accelerate cycle times. This includes initiatives like using AI to help optimize clinical trial participation and site selection. In parallel to these efforts and aligned with our ambition of continuing to build the pipeline, we are also working with our research and corporate development colleagues to evaluate external innovation opportunities across the development stages and several indications. Overall, we believe that through these objectives, we have the opportunity to execute on a meaningful opportunity that Chris has laid out for Biogen. Turning to the quarter, I would like to begin with Alzheimer's, where we are working with Eisai to continue generating important insights on LEQEMBI in early AD. This includes areas like long-term treatment effects and real-world evidence, such as that presented at CTAD, but importantly, we are also working to provide optionality for patients. Encouraged by data showing expanded benefits with continued LEQEMBI treatment and beyond just the removal of plaques, we continue to pursue maintenance dosing options. We expect regulatory decisions on maintenance dosing for both the IV and the subcutaneous auto-injector next year in 2025. Furthermore, the AHEAD 3-45 study, evaluating the ability of LEQEMBI to prevent or delay Alzheimer's in preclinical or presymptomatic AD, enrolled well, and we just completed enrollment this month in October. I look forward to providing updates as this trial advances. We are also working to expand our leadership by advancing novel treatment approaches, including shuttles across different disease states and targets. Moving to immunology, we believe we are building an industry-leading late-stage pipeline comprised of programs with established proof of concept. These programs cover a range of immune-mediated diseases characterized by significant unmet need. This includes our recent acquisition of felzartamab, where we expect to initiate three Phase 3 studies next year in AMR, IgAN, and PMN while continuing to evaluate other indications where this mechanism of action may be relevant. Additionally, we have multiple programs in SLE where it is estimated that over 3 million individuals worldwide are affected. Current standard care is associated with suboptimal efficacy and various treatment-related toxicities, leading to lasting negative consequences such as organ damage. SLE is also the number one cause of death in women aged 15 to 24 in the US, and treatment options for before, during, and after pregnancy are limited due to safety concerns and contraindications for most common therapies. Underscoring the potential of our immunology pipeline, we are pleased to report that the Phase 3 study of dapi plus standard care met the primary endpoint, showing a statistically significant greater improvement in disease activity as assessed by the BICLA endpoint at 48 weeks versus placebo plus standard care. Importantly, we also saw clinical improvements on key secondary endpoints assessing disease activity and flare prevention, two areas that represent key treatment goals for managing SLE. Following the prior Phase 2 study, Biogen, along with our collaboration partner, UCB, spent time analyzing the results in an attempt to design and derisk a Phase 3 study and demonstrate a potential treatment effect. These learnings, combined with our understanding of the underlying disease biology, informed the design of the Phase 3 study which included updated screening criteria to ensure patients had active disease in need of biologic therapy on top of standard care. The success of this approach is punctuated by the fact that dapi is only the third molecule to show positive Phase 3 results in a global study in SLE over the last 20 years. We look forward to presenting detailed results from this Phase 3 study as a late breaker at the ACR annual meeting next month and together with UCB, expect to initiate the second Phase 3 study this year. Turning to SMA, our priority has always been on continuing to improve outcomes for patients. We were pleased to present detailed results from the DEVOTE study evaluating the investigational higher-dose regimen of nusinersen at the World Muscle Society meeting earlier this month. The higher dose regimen consists of 250-milligram loading doses followed by 28 milligrams maintenance doses every four months. This high-dose regimen delivers more drug in the first administration than the entire two-month loading phase of the approved SPINRAZA 12-milligram regimen. Consistent with the more rapid loading regimen, higher-dose nusinersen slowed neurodegeneration faster than SPINRAZA 12 milligrams as measured by neurofilament at day 64, an objective biomarker. The pivotal infantile onset cohort in Part B of DEVOTE met the primary endpoint of change from baseline to six months in the CHOP INTEND compared to the prespecified match sham group, demonstrating a clinically and statistically significant improvement. We also observed trends in reduced risk of death or permanent ventilation versus both sham control and the currently approved regimen. In addition, we shared initial results from the open-label Part C portion of the study with participants aged 4 to 65, transitioning from SPINRAZA 12 milligrams after an average of nearly four years on treatment. This group showed improvement in motor function after transitioning to higher dose. These are exciting results as we seek to help patients currently on disease-modifying therapies. Importantly, the high dose regimen was generally well tolerated and showed a safety profile similar to the approved 12-milligram regimen. We believe these results highlight the unique potential of SPINRAZA to help address remaining unmet needs in individuals with SMA, and we aim to submit global regulatory filings later this year. In conclusion, this past quarter, I believe we continued to execute well and achieved several important development milestones that highlight the potential of our pipeline to deliver meaningful new therapies to patients. In addition to late-stage readouts in lupus and SMA, we also submitted ex-US filings for zuranolone and PPD and obtained approvals for SKYCLARYS and QALSODY in Switzerland and China, respectively. We also presented new data insights across multiple disease areas at multiple medical meetings, including Alzheimer's, neuromuscular, and renal disease. Today, we believe that the pipeline is well positioned to deliver a regular cadence of pivotal readouts and potential launches. We continue to aspire to bring transformative medicines to patients' lives while we deliver on Biogen's objective of achieving sustainable growth. Furthermore, I believe that the same core capabilities and deep disease area expertise that enabled us to reshape our current pipeline and establish a leadership foothold in areas like Alzheimer's, immunology, and rare disease also uniquely position us to evaluate external innovation as we look for opportunities to augment our pipeline. With that, I would now like to hand the call over to Mike for a financial update.

Thank you, Priya, and good morning to everyone. I'd like to provide some color on our third quarter results, and all the comparisons that you'll hear me make are versus the third quarter of 2023, unless you hear me note otherwise. Total revenue for the quarter was $2.5 billion. Both total revenue and core pharmaceutical revenue were down 3%. Non-GAAP diluted EPS was $4.08, and that's down 6%. In just a moment, I'll provide some additional detail on some key dynamics to note from the third quarter. Non-GAAP operating income increased 4% versus the third quarter of 2023 as we continue to benefit from our R&D prioritization and Fit for Growth initiatives. We are pleased to again be raising our full-year 2024 guidance range. In just a few moments, I'll provide some additional color on our raised guidance range for 2024. Few comments on revenue for the third quarter. Our MS product revenue declined by approximately 9%, and that was driven primarily by competitive dynamics in the space, along with some channel dynamics. Importantly, we announced last week that the European Patent Office upheld the validity of Biogen's TECFIDERA related patent covering DMF dosing, which expires in February of 2028. We are pleased with the decision. However, generics are challenging this patent, and we do anticipate further challenges. TYSABRI has seen impacts from a biosimilar entrant in Europe, and although a biosimilar is not yet launched in the US, we continue to see increasing competition in the high-efficacy class. Next, our rare disease franchise produced revenue of $495 million, which represents growth of 10%. The SKYCLARYS launch continues to progress in the US, where revenue of $82 million increased 8% from the second quarter, and that was driven by increased demand. SKYCLARYS is now generating revenue in 15 countries outside the US, with third-quarter global revenue of $102 million. This was up modestly from the second quarter, driven by an increase in demand, which was partially offset by some pricing and reimbursement dynamics in some newly launched markets. Global SPINRAZA revenue of $381 million declined by $67 million or 15% and that was impacted by the loss of an annual tender in Russia, which resulted in an unfavorable impact of approximately $45 million in the third quarter. It is important to note that this tender which occurs and contributes to revenue only once each year affected Q3 2024 results, but we do not expect further revenue impact for the rest of this year. The global decrease was also impacted by the timing of shipments and some foreign currency. SPINRAZA US revenue was up 2% to $153 million, and we remain encouraged by the performance here. ZURZUVAE delivered $22 million of revenue in the quarter, and that's up 49% from the second quarter, and we continue to be encouraged by an increase in demand. We again saw sequential growth for LEQEMBI with third quarter global in-market sales booked by Eisai of approximately $67 million, and that's up 66% versus the second quarter. LEQEMBI in-market sales in the US were $39 million, that's up 33% versus the second quarter. Finally, contract manufacturing, royalty, and other revenue was $250 million. That was notably lower year-over-year as expected due to the completion of certain batch commitments in 2023. Now, I'll turn to a few comments on third quarter expenses. Non-GAAP cost of sales as a percentage of revenue decreased 2 percentage points, driven primarily by product mix, particularly the year-over-year increase in revenue from new product launches and the decrease in contract manufacturing revenue, as well as lower idle capacity charges. Non-GAAP R&D expense decreased by $48 million as we continue to see benefits from our R&D prioritization initiatives. Non-GAAP SG&A expense increased 1% in the third quarter as benefits from our Fit for Growth initiative allowed us to absorb most of the $45 million of incremental costs in the third quarter associated with our launches. We continue to believe we can garner $1 billion of gross and $800 million of net savings associated with our Fit for Growth initiative by the end of 2025. Non-GAAP EPS was $4.08 in the third quarter. EPS was unfavorably impacted by certain non-operating items, including a decline of approximately $80 million of net interest income on lower cash balances as a result of the Reata and HI-Bio acquisitions. This was partially offset by some favorable tax items in the quarter, which added about $16 million to our net income. Now a brief update on our balance sheet. We ended the quarter with $1.7 billion of cash and marketable securities and approximately $4.6 billion of net debt. We were able to generate approximately $901 million of free cash flow, and that was our highest free cash flow since the second quarter of 2021. Third quarter 2024 free cash flow benefited in part from some favorable working capital dynamics. We continue to believe that our balance sheet remains strong and provides us the capacity to continue to invest in both internal and external growth opportunities. Turning now to guidance. We're pleased that the business performance year-to-date again supports raising our full-year 2024 non-GAAP diluted EPS guidance range from between $15.75 and $16.25 to a new range of between $16.10 and $16.60. This new range reflects expected growth of approximately 11% at the midpoint of the range compared to full-year 2023. I'd like to highlight a few of the key assumptions relevant to this guidance. First, on the top line, we continue to expect that our total revenue will decline by a low single-digit percentage. As we've communicated throughout the year, we expect to continue to ramp investment behind our new product launches and key R&D programs which includes felzartamab following our acquisition of HI-Bio. Lastly, as is typically the case with our business, we expect seasonally higher SG&A spending in the fourth quarter compared to the rest of the year. I would refer you to this slide as well as our press release for other important guidance assumptions. In closing, we remain focused on advancing our ongoing product launches and key areas of our late-stage pipeline. We believe our efforts in these areas will help position Biogen for long-term sustainable growth, which continues to be our number one goal. With that, we will open up the call for questions.

Your first question comes from the line of Brian Abrahams with RBC Capital Markets.

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? Thanks.

Yeah. I'll take the second part of the question, Brian, and then pass it over to Alisha for 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 last fall. We had to get all of the commercial team in place, but we also needed clarity around things like reimbursement of the PET scans. For us, I think this is about the anniversary of the launch. 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. There are also many things like who's the right patient? 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. It seems opportune for the two partners now to come together and review what's working well and what we could be doing more. We'll 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. Yet, we do see a lot of physicians 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, the lumbar punctures, the MRIs, and the infusion beds. We have 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. I think that's the way it's going to progress probably until we get the subcutaneous for induction, which could be quite a game changer. More use of blood-based diagnostics in place of PET scans would 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.

Yeah. Thank you, Chris, and thanks for the question, Brian. As all of you have seen in Q3, we did have steady launch progress, including in the new number of patients. Also encouraging is what you don't see in the trends that we're able to see is the total prescribers writing. In Q3, the new number of writers increased by 40% versus Q2. We are seeing these physicians come on every single week, and IDNs are expanding every single week as well. However, at the end of the day, just like in the beginning of the launch and even today, fast forward after we've been out in the field for a while, what shows up in market research as the key barrier is still these infrastructure challenges, as Chris alluded to. However, now with the new Biogen team on board, we can also confirm that, especially with physicians who haven't written yet, that is really one of their main concerns. After the initial concerns, we found that ARIA is still a concern, but it is not as big as it once was. As they work through some patients and work out their protocols, we see that alleviate. Now that we have our full field force out there, we were very intentional as an organization about who to hire. We had over 1,000 applicants when we posted these roles, and we only had a little over 25 roles to fill. We were really able to pick individuals who either had history in Alzheimer's disease or a history in these territories and already had built-in relationships. The teams have been out there for several weeks. In offices specifically where Biogen has overlaid with Eisai, we do see a little bit more accelerated growth than in the rest of the nation. We can reach more targets, and also doors are opening up a little more easily for us because those representatives had prior relationships with physicians. In the Pacific Northwest, for example, we had a rep who had a 17-year relationship within MS. They were able to help the physician right away. Another physician in the Southeast had a 20-year relationship and unlocked over 30 patients in less than a two-week time period. So the relationships we've seen have mattered, and we're starting to see some acceleration.

Thank you, Alisha. Next question, please.

Your next question comes from the line of Phil Nadeau with TD Cowen.

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

Sure. I'll turn that over to Priya.

Yes, thank you for that question. We remain on track to complete our subcutaneous maintenance filing and expect that to be imminent. Moving on to the initiation, we are generating data and analyzing the data as part of the CLARITY open-label extension study in the subcutaneous sub-study. As Eisai has indicated, we remain on track to expect a regulatory outcome on subcutaneous initiation therapy by Q1 of the 2026 calendar year.

Thank you, Priya. Next question please, operator.

Your next question comes from Marc Goodman with Leerink.

Yes. Could you comment a little bit more on SKYCLARYS outside of the US? There was a comment in the opening remarks about pricing and reimbursement dynamics. If you could just give us a little more color there on the challenges. Thank you.

As you know, we receive approval in Europe, but we have to negotiate reimbursement country by country. We are meeting with physicians and getting patients started on treatment, but the revenue generated from those patients differs by country. In some locations, we can implement an early access program and charge for it, while in others we cannot. Additionally, some countries approve reimbursement much sooner than others in Europe. We are currently in this process. However, we have not initiated revenue generation or patient demand generation relative to reimbursement yet. We are active in all countries, enrolling patients, and tracking a significant monthly increase in patient numbers. The quarterly revenue figures will reflect when these patients become revenue-generating. It may be inconsistent initially since patient demand is currently outpacing revenue generation. We need to set prices for the early access programs we can charge for. In certain instances, there may be a refund if the reimbursed price ends up being lower than what we are charging. As we make our way into various countries and better understand the pricing, we have needed to adjust the revenue we have recorded for those programs.

Thank you, Chris. Next question, operator.

Your next question comes from the line of Salveen Richter with Goldman Sachs.

Thank you, good morning. Chris, you spoke to the efforts with regard to the late-stage pipeline in R&D, but you've also noted the lever regarding business development. Any updated thoughts here on the strategy?

We're in one of those classic situations in our industry where we've had a legacy portfolio of assets facing increased competition. On the horizon, we see an extremely promising pipeline, and we want to bridge across that. Some companies choose to simply wait it out and wait for the pipeline. Our business is likely to grow between now and 2028, but I would say that the growth is not satisfactory for us. So we are looking, and I personally spent a lot of time on this. Are there assets that we could bring in that could enhance our revenue growth in the near term but also create value for shareholders? We're not really interested in just buying revenue. If we can buy growth and make a very good return on investment, then we'll do so. Assets get highly priced as they get close to the market. So we have a whole team looking at both public and private companies. I think we still have considerable financial capacity. Mike, you may want to comment on that. But we are active in that, but we are also disciplined fiduciaries of shareholder money.

Just to give you a frame of reference, we ended the quarter with about $1.7 billion of cash on hand. When you think about our capital structure, we have about $6.3 billion in total debt on an EBITDA run rate of about $3.3 billion to $3.4 billion. So that's below 2 times gross. I think it's a very modest amount. With about $2 billion of free cash flow year-to-date, and $901 million in the quarter, you can see over the next couple of years, if you added a reasonable amount of incremental debt, plus the free cash flow and cash on hand, there's comfortably $8 billion to $10 billion of capacity over the next one to two years in order to collaborate and transact and look at acquisitions and other things that we can do to help supplement our growth.

Thank you, Mike. Next question, please, operator.

Your next question comes from the line of Michael Yee with Jefferies.

Thank you, good morning. We noticed that you completed the enrollment of the AHEAD 3-45 study. Could you remind us what the timeline looks like and if there is a potential for an interim analysis and what that would be based on? My understanding is that these are pretty early presymptomatic patients. Is there an enrichment of the population? Why do you expect that this can be positive? Thank you.

Thank you, Michael. Yes, we're excited about the fact that AHEAD 3-45 has completed enrollment in October. Just to remind everyone, it's two trials, and one is looking at early intermediate stages, patients with early intermediate stages of amyloid. The other is with higher load amyloid. These are very large trials—about 400 patients in AHEAD 3, which is the earliest intermediate stage, and about 1,000 patients in AHEAD 4 and 5. The trials have a 216-week time point. We are continuing to engage with regulators and look at all options of when these might be ready to read out. We're very excited about having completed enrollment, specifically because the data we've shared from the CLARITY study shows that treating early and with patients having low or no tau really yields benefits in terms of stabilization and even clinical improvement. this is a very exciting space for patients.

Thank you, Priya. Next question, please.

Your next question comes from the line of Umer Raffat with Evercore ISI.

Hi, guys. Thanks for taking my questions. I thought I'd focus on a slightly different topic for a quick second. There seems to be a significant amount of R&D investment going into lupus between your felzartamab and possibly the CD38 as well. Given your recent Phase 3 success, how should we weigh the time it takes for you to get to market relative to some of the emerging data from potentially CD19 bispecific or T cell engagers?

Thank you, Umer. Yes, we continue to watch the innovation in the space, and it's exciting for patients. But stepping back, when you think about the potential dapi can offer. With the data that we shared and will be sharing more data at ACR in a few weeks here, we are very excited by what we've seen in this moderate to severe population. SLE is really a chronic disease with a very heterogeneous, high global burden, especially in women and underserved populations. We believe that many options will be required. While the bispecifics and CAR-Ts may show efficacy in small populations, we must keep in mind that these are very small data sets and may not be relevant to the entire population. The scientific hypothesis and continuing to generate data sort of in Phase 2 becomes really important. With dapi, we're addressing and inhibiting the CD40 ligand, which reduces B and T cell activation, downregulating interferon pathways. With litifilimab, we're going after the Type 1 interferon signature. We are optimistic about the data we have seen so far and the momentum in our trials.

I'll just add, Umer, I was at GSK when we were developing BENLYSTA over 15 years ago. We almost killed that program because of modest efficacy until we realized that everything else was failing, and this was the last product standing. To date, only two products have been approved. Dapi would be the third. We've seen an awful lot of data in small populations as Priya has said. I think we have to wait and see who actually gets to the finish line. On CAR-T, some interesting data, but the logistics of CAR-T are not yet such that you're going to see significant numbers of patients being treated in my personal opinion. There’s a need today. We have a product that has demonstrated results, and we’re going full speed ahead.

Thank you, Chris. Next question, please.

Your next question comes from the line of Jay Olson with Oppenheimer.

Hey, congrats on the quarter, and thank you for taking the question. We're curious about the $14 billion of peak revenue potential from your four key pipeline programs. Can you talk about the relative contribution and timing of the four products in terms of which ones are the largest and nearest term? Thank you.

I don't want to get into giving individual revenue forecasts. I think the idea was to give you a sense of the pipeline's magnitude. We all know not everything can always succeed. Looking at where there will be significant programs, if you look at BIIB080 in Alzheimer's, we do believe—and not just us. Lilly and Roche continue to invest significantly. AbbVie has invested quite a lot in a very early-stage asset in Alzheimer's. Many in the field believe going after tau will significantly benefit patients. We have dapi and also have litifilimab and felza in lupus nephritis. We see lupus as a significant market. BENLYSTA is currently selling for about $3 billion a year. AstraZeneca has a product that has not performed as well. There’s consideration that a significant room for expansion. In felza, we have three Phase 3 programs. So if you add them up, 14 is the top number, but our teams estimated it somewhere between 9 and 14. Again, we have to see what the clinical trial data looks like in the actual profile. But the potential of these markets, along with unmet need and the potential for differentiation, makes us increasingly excited about this emerging pipeline.

Thank you, Chris. Next question, please.

Your next question comes from the line of Evan Seigerman with BMO Capital Markets.

Hi guys. Thank you for taking my questions. I know in the past we've talked about the potential for SPINRAZA returning to growth. Given the softer numbers this quarter, can you discuss how you think that this is achieved? Is it predicated on high-dose nusinersen? Or are there other factors and levers you can pull to accelerate/reaccelerate the growth of this product? Thank you.

Globally, if we take out some of the one-time effects, we saw growth for SPINRAZA. It's clearly a very competitive marketplace. It turns out that even with intrathecal administration, efficacy is what matters in severe diseases. A study demonstrated the benefit of adding SPINRAZA to ZOLGENSMA, as gene therapy has limitations in patient treatment. DEVOTE is extremely important because it allows us to get to the right level of therapeutic benefit faster than we could previously. It reduces intrathecal injections for loading phase. This is an efficacy gain. From a US perspective, how do you see that?

Thank you, Chris. SPINRAZA has been a strong contributor, especially in the US. So when you look at rare diseases, we believe SPINRAZA has set the benchmark for excellent efficacy. Year-over-year growth continues, and that’s during a time two strong competitors. We believe our growth comes from switchback patients returning to SPINRAZA after realizing the efficacy isn't there in competitors. We are still finding new patients in this space, even with three major biopharma companies. We've also developed an AI system along with our team to find patients quickly. High-dose nusinersen feedback from physicians and patients indicates we must prepare for its filing and potential approval. We believe high dose will support growth in the US.

Thank you, Alisha. Next question please, operator.

Your next question comes from the line of Paul Matteis with Stifel.

Hey, thanks very much for taking the question. In connecting some of the dots here, Chris, it relates to the hires you've made and some of your portfolio decisions around certain legacy high-risk assets. It feels like more and more Biogen is bolstering its expertise in neurology and maybe shifting away from it. Is that the right way we should think of things going forward? In other words, when you look at business development, do you have any appetite any more to take on risk in neuroscience or do you think immunology and rare areas where you have a lot of experience historically are going to be the sweet spot going forward? Thanks.

I would say first, we're already long in neurology and neuroscience. We have significant investments in BIIB080, continued significant investment in LEQEMBI. We are still spending hundreds of millions of dollars every year on LEQEMBI R&D. We have several programs coming behind that in early stage development. We're working on brain shuttle technology. I think it’s not a good idea to just be in one therapeutic area. We have capabilities beyond neuroscience. The whole MS franchise is an immunology franchise—you treat MS through the immune system. I believe we have an awful lot of immunology capability, which gave us the confidence to proceed with the HI-Bio acquisition. I&I has become the second most important area in R&D after oncology, leading to many emerging opportunities in BD. Biogen has a tremendous capability in small volumes and high-value products; immunology matches this well. However, expanding into other areas in immunology, we want to avoid competition with large pharma companies and do not want to engage in incremental innovation.

Thank you, Chris. Can we move to our last question please?

Your next question comes from the line of Terence Flynn with Morgan Stanley.

Thanks for taking the question, Mike. I was just wondering if you can help us think directionally about margins for 2025 and some of the puts and takes.

Sure. I'm assuming you're referring primarily to our operating income margin. But I think we've made good progress. The improvement in the third quarter was a little less than what you've seen, with some lumpiness to it. Most of that was driven by the revenue dynamics we talked about, and some of the higher-margin revenue like SPINRAZA and SKYCLARYS. If you look year-to-date, we are 7% up on the operating income line—a 7% percentage point improvement, which is 23% growth year-on-year. In our guidance, we talk about mid-single-digit improvement for the full year and high teens growth for the full year. We feel confident that we can garner the $1 billion gross and $800 million net savings, which will continue to help our margins. We’re not guiding beyond this year, but as we exit 2024 into 2025, remember that we expect the $800 million of savings we expected to get half by the end of this year and the other half next year.

Thank you, Mike, and thank you, everyone, for joining us today. Of course, the IR team will be available to answer any additional questions. Thank you.

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