Biogen Q2 2022 Earnings Call Transcript

Quartr
Provided by Quartr
July 20, 2022

Key Takeaways

  • Biogen has raised its full-year 2022 guidance, increasing revenue outlook to $9.0–$10.1 billion and non-GAAP EPS to $15.25–$16.75 despite currency headwinds.
  • The FDA granted priority review under the accelerated approval pathway for lecanemab in early Alzheimer’s, with a PDUFA date of January 6, 2023, and a Phase 3 readout expected this fall.
  • Biogen and Sage reported positive Phase 3 SKYLAQ data for zuranolone in postpartum depression, supporting imminent regulatory filings in both PPD and MDD.
  • Several early-stage R&D programs, including the anti-DAO antibody BIIB066 and the AMPA potentiator BIIB104 in schizophrenia, were discontinued after unsuccessful trials.
  • Q2 revenue was $2.6 billion (down 7% YoY) with mixed performance across key products, offset by a $5 billion gain from the Samsung Bioepis stake sale.
AI Generated. May Contain Errors.
Earnings Conference Call
Biogen Q2 2022
00:00 / 00:00

There are 13 speakers on the call.

Operator

Good morning.

Speaker 1

My name is Katie, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Biogen Second Quarter Earnings Call and Financial 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. Quarter.

Speaker 1

I would now like to turn the call over to Mike Henke, Head of Investor Relations. Mr. Henke, you may begin your conference.

Speaker 2

Quarter. Good morning, and welcome to Biogen's Q2 2022 earnings call. Before we begin, I encourage everyone to go to the Investors section of biogen dot call to find the earnings release and related financial tables, including our GAAP financial measures and a reconciliation of the GAAP to non GAAP financial measures that we will discuss today. Financials are provided in Tables 12 and Table 4 includes a reconciliation of our GAAP to non GAAP financial results. Quarter.

Speaker 2

We believe non GAAP financial results better represent the ongoing economics of our business and how we manage the business internally. We have also slides on our website that follow the discussions related to this call. I would like to point out that we will be making forward looking statements, which are based on our current expectations and beliefs. Call. These statements are subject to certain risks and uncertainties and our actual results may differ materially.

Speaker 2

I encourage you to consult the quarter. On today's call, we're joined by our Chief Executive Officer, Michelle Vuonatsos Doctor. Priya Singhal, Interim Head of Search and Development and our CFO, Mike McDonnell. As a reminder, during the Q and A portion of the call, we kindly ask that you limit yourself to one question. I I will now turn the call over to Michel.

Speaker 2

Good morning, everyone, and thank you for joining us. Biogen continued

Speaker 3

to execute well in the Q2, and we are pleased to be raising our full year financial guidance. We believe our commitments are critical steps on our path to drive renewed value creation for both patients and shareholders over time. 1st, together with SI, we're granted priority review for lekanimab under the accelerated approval pathway in the U. S. For early Alzheimer's disease.

Speaker 3

We expect an FDA decision by January 6 next year. And in parallel, we look forward to the upcoming Phase 3 readout expected in the fall. Additionally, together with Sage, we reported data in postpartum depression. The SKYLEG study is now the 2nd positive Phase 3 study supporting the potential of the Phase 3 study in PPD with Pursuit of innovation, however, does not come without setbacks and we were disappointed to learn that the quarter. Phase 2 study in schizophrenia was not positive.

Speaker 3

I will now focus on the near term operational priorities we outlined in our last call, While Priya will review our recent progress in R and D and Mike will discuss our 2nd quarter performance. First, we are continuing to focus our R and D resources on programs where we see the greatest potential, while also aiming to rebalance The risk profile across our pipeline. For example, we intend to accelerate the regulatory filing of zuranolone in postpartum depression following the positive SCALAK study. In addition, we have terminated some R and D programs that we believe quarter. Success such as BIIB066, an anti dao antibody in Alzheimer's disease and BIIB-one hundred, a small molecule inhibitor in ALS.

Speaker 3

2nd, we are on track to implement the cost reduction and productivity measures outlined on our last call in order to further align our costs with our revenue base while maintaining our focus on execution. 3rd, we are pursuing additional global growth opportunities with a focus on key emerging markets. This includes China, where we are encouraged by the launch of SPINRAZA. 4th, we are focused on driving renewed growth in our biosimilars business. We just recently launched BioViz, the 1st biosimilar referencing Lucentis in the U.

Speaker 3

S, representing Biogen's first entry into the U. S. Biosimilars market. We also expect to begin launching Bio Viz outside the U. S.

Speaker 3

Early next year. Quarter. With the completion of the sales of our joint venture interest in Samsung Biofees in the 2nd quarter, we now have an expanded quarter. We continue to pursue the biosimilars business on our own as we aim to bring more biosimilars products to more patients' geographies. We continue to advance our biosimilars pipeline, which includes 2 Phase 3 programs referencing EYLEA and APKEMRA.

Speaker 3

5th, we remain focused on capital allocation during the quarter. We entered into new collaborations with MedRhythm in MS and Alectus in Parkinson's disease. And we continue to evaluate both internal and external value creation opportunities. We also returned approximately $500,000,000 to shareholders during the quarter through share repurchases. We are also pleased with the progress in our collaboration with GenTek for mozunatezumab, a CD20, CD3 bispecific antibody, which we currently approved in the EU for patients with relapsed or refractory follicular lymphoma.

Speaker 3

2nd. The BLA of mozumtizumab for the first time in the second half of twenty nineteen, we have a very strong year of growth in the U. S. Our progress across these areas, given the recent advancements we have made in R and D, have the potential to quarter. Of course, not all our programs will deliver the results we hope, which is why we are continuing to advance

Speaker 4

quarter. We will now build

Speaker 3

a diversified and appropriately balanced pipeline as we work to create and sustain a multi franchise portfolio over time. This includes near term opportunities in Alzheimer's disease and depression followed by other areas such as Parkinson's disease, lupus and Stroke in the mid to late 2020s. We remain committed to taking advantage of all the strengths of the company, Our talent, our portfolio, our manufacturing capabilities, our pipeline, which includes 10 programs in Phase 3 are filed and our strong balance sheet to deliver results for both the patients we serve and our shareholders. I will now turn the call over to Priya for an update on our recent progress in R and D.

Operator

Thank you, Michelle, and good morning, everyone. Quarter. I would like to start by thanking the Biogen team for their focus and dedication as we continued to advance and diversified R and D pipeline. As Michel mentioned, we had several exciting R and D achievements this past quarter that I believe are key steps toward advancing our pursuit of meaningful new therapies for patients. Quarter.

Operator

Starting with Alzheimer's disease, as Michelle mentioned, the FDA has accepted and granted priority review for the BLA for lecanumab in early Alzheimer's disease under the accelerated approval pathway. Question. Eisai is also continuing to progress on the lenumab Phase 3 CLARITY study with an expected readout this fall. Question. The CLARITY AD study was designed to build upon the results of the prior Phase 2 study and utilizes clinically valid quarter.

Operator

Given the robust trial design, We believe that the totality of the CLARITY AD results should allow us to further understand the effect of amyloid removal on different clinical domains of Alzheimer's disease. The FDA read that CLARITY AD, when completed, Can serve as a confirmatory study to verify the clinical benefit of lucanumab. Pending the results of quarter. Eisai plans to file for traditional approval of leucanumab in the U. S, EU and Japan quarter.

Operator

This timing may allow for lekanamab, if approved, to become the 1st anti amyloid antibody for Alzheimer's disease with TRADIGNA approval. Quarter. Last quarter, U. S. Simulation modeling based

Speaker 4

on the

Operator

ocanaumab Phase 2 results. Eisai also published an analysis estimate potential long term outcome of treatment with lecanumab. The results of this analysis suggest call. That compared to standard of care alone, individuals treated with lecanumab, in addition to standard of care, may potentially experience Slower disease progression to mild, moderate and severe Alzheimer's disease from baseline by 2.51, 3.13 and 2.34 years on average, respectively. These preliminary results could possibly escalate quarter.

Operator

We will now begin the Q1 of 2019. Question. Beyond lekanumab, we continue to advance pipeline that is diversified across molecular targets and modalities. This includes BIIB080, our ASO targeting tau, where we expect to initiate a Phase 2 study later this year. 2nd.

Operator

Moving to neuropsychiatrists, together with Sage, we were very excited to announce positive results from the SKYLAQ and all key secondary endpoints with a 2 week course of 50 milligrams uranalone demonstrating 2nd. A statistically significant improvement in the symptoms at day 15 as compared to placebo, the primary endpoint and at day 3, day 2845. This is the 2nd positive Phase 3 study of zuranolone in postpartum depression further reinforces the clinical profile of zuranolone that has been observed to date. Question. Postpartum depression is one of the most common medical complications occurring during and after pregnancy, quarter.

Operator

Affecting an estimated 1 in 8 mothers or approximately 500,000 women in the United States each year. Question. Depression, sadness, anxiety, thoughts of hurting oneself or one's infant and thoughts of suicide quarter. This is an area of significant unmet need where new treatment options are desperately needed. Question.

Operator

With the SKYLOQ study results now in hand, we are working with Sage to advance a single regulatory filing quarter and a long term growth of our business. We expect to complete in the second half of this year. Quarter. Sage also presented the results of the zuranolone human abuse liability potential study and the College on Problems of Drug Dependence Annual Meeting. The results of this study showed That 30 60 milligrams of zuranolone demonstrated lower abuse potential as compared with apsolone,

Speaker 4

quarter. We are pleased to announce that we are making progress on the progress we made in the quarter. We are pleased with the progress

Operator

we made in the quarter. We are pleased with the progress we made in the quarter. We are pleased with the progress we

Speaker 4

made in the quarter. We are pleased with the progress we made in the quarter. We are pleased with the progress we

Operator

made in the quarter. We are pleased with the progress we made in the comparable to alprazolone 1.5 milligrams and 3 milligrams. As a reminder, the zuranolone's second. Also in neuropsychiatry, we were disappointed that the TALI Phase 2 study of BIIB-one hundred and four in cognitive impairment associated with schizophrenia or CIAS did not meet its primary or secondary efficacy endpoints. Second.

Operator

Most adverse events in the BIG-one hundred and four treatment arms were mild to moderate in severity. Given the consistent lack of efficacy quarter. During the entire 12 week evaluation period, we have decided to discontinue the BIIB-one hundred and four program in CIAS. Quarter. We are continuing to analyze the data and plan to present detailed results at an upcoming scientific forum.

Operator

Quarter. Moving to our neuromuscular portfolio. Last month, we presented new 12 month data from the VALOR Phase 3 study and its opening extension of the first one in SOD1 ALS, a progressive and rare genetic form of ALS. Call. This analysis was designed to evaluate participants who initiated to 1st and during the next month quarter.

Operator

We have a very strong year of treatment quarter during the start of the open label extension. The results of the new planned analysis showed that initial earlier initiation of Tofersen quarter. Slow decline across measures of clinical and respiratory function, strength and quality of life. Quarter. Furthermore, Tofersen led to robust and sustained reductions in neurofilament, a marker of axonal injury and neurodegeneration.

Operator

We believe that these results build upon the encouraging trends quarter. We'll now begin the presentation originally observed in the VALOR 6 month randomized study and further support call. The potential for tofersen to slow disease progression in SOD1 ALS. We continue to engage global regulators with these and we will provide updates when appropriate. In movement disorders, we initiated the Phase 2b Luma study in Parkinson's disease for BIIB122, a small molecule LARP2 inhibitor that we are developing in collaboration with Denali Therapeutics.

Operator

LOCK2 mutations result in hyperactivation of the kinase and are estimated to account for roughly 5% of familial and 6% of sporadic Parkinson's disease. Question. By inhibiting LOCK2, BIIB122 is designed to target an underlying logical pathway implicated in Parkinson's more broadly, both in people with and without pathogenic LOCK2 mutations. The Luma study is designed to evaluate question. Whether once oral BIIB122 administration can slow clinical worsening call.

Operator

We also anticipate initiating the Phase 3 Lighthouse study later this year designed to evaluate the safety and efficacy of BIIB122 in Parkinson's disease patients with a confirmed LOCK2 pathogenic variant. Question. There are roughly 10,000,000 people suffering from Parkinson's disease worldwide and no approved treatments that slow disease progression. Quarter. By inhibiting LAP-two, we have the potential to deliver a 1st in class therapy that may significantly alter the course of disease.

Operator

Quarter. In conclusion, we executed well against our other objectives in the Q2 and continue to prioritize our efforts across both therapeutic areas and programs. As Michel mentioned, We have already made several decisions resulting from this prioritization effort. And this is an ongoing process that will be quarter. Looking toward the remainder of 2022, call.

Operator

We anticipate several exciting milestones. These include zuranolone regulatory filings for both MDD and PPD in the U. S, question. The Phase 3 readout of lecanumab in Alzheimer's disease and the initiation of mid to late stage studies in Alzheimer's, quarter. These are therapeutic areas characterized by significant unmet need and where Biogen opportunity to deliver 1st in class therapies to patients.

Operator

I will now pass the call over to Mike.

Speaker 4

Quarter. Thank you, Priya, and good morning, everyone. I will provide some highlights of our financial performance for the Q2 and an update to our full year '22 guidance. Please note that all financial comparisons are versus the Q2 of 'twenty one unless otherwise noted. Quarter.

Speaker 4

Total revenue for the Q2 was $2,600,000,000 which was a decrease of 7% at actual currency and 5% at constant currency. 2nd quarter. GAAP diluted earnings per share in the second quarter was $5.25 a decrease of 6%. Quarter. Total MS revenue inclusive of OCREVUS royalties was $1,700,000,000 an increase of 4% at actual currency and 3% at constant second.

Speaker 4

Full TECFIDERA revenue of $398,000,000 decreased 18% at actual currency and 17% at constant currency. TECFIDERA revenue in the U. S. Increased versus the prior quarter. However, this was primarily due to channel dynamics and we do expect TECFIDERA in the U.

Speaker 4

S. To decline throughout year of 2022. Outside the U. S, TECFIDERA was modestly impacted by generic competition in markets such as Canada and Germany. At this point, we are aware of several generic applications that have been approved in Europe, and we will be monitoring the situation closely.

Speaker 4

Importantly, we were Please to be granted a new patent in the EU and reserve all rights to assert the patent against infringing China, but it's quarter. Global PUMERITY revenue of $137,000,000 increased 51% at actual currency and 52% at constant currency. PUMERITY continued to grow in the U. S. And we are pleased with the trajectory.

Speaker 4

Outside the U. S, PUMERITY is now launched in 14 markets. We are currently working with our contract manufacturing suppliers to address potential supply constraints and have therefore delayed any additional country launches. Second. Tysabri revenue of $516,000,000 decreased 2% at actual currency and was flat at constant currency.

Speaker 4

Quarter. In the United States, Tysabri revenue was negatively impacted by modest volume declines, partially offset by favorable pricing. Outside the U. S, we were pleased to see continued patient growth. We are aware that regulatory filings for a biosimilar referencing Tysabri have been and to both the FDA and the EMA.

Speaker 4

We will continue to enforce our IP, but a biosimilar could launch upon approval in the U. S. And EU, quarter, which could occur next year. Global interferon revenue of $150,000,000 decreased 13% at active quarter. We have a strong year over year growth in the quarter and was impacted by the continued shift from the injectable plasma to oral or high efficacy Therapies.

Speaker 4

Versus the prior quarter, interferon revenue increased 13% at actual currency and 14% at constant currency, primarily due to seasonality and channel dynamics in the U. S. Moving to SMA, global SPINRAZA revenue of $431,000,000 quarter. We're encouraged to See fewer SPINRAZA discontinuations during the quarter. Outside the U.

Speaker 4

S, the revenue decline was primarily driven by competition quarter results with the timing of shipments in certain markets, price dynamics and negative currency impacts. Global SPINRAZA revenue decreased 9 quarter and Q1 of 2022 at actual currency and AFFO at constant currency, driven by competition and negative currency impacts outside the U. S. As well as some seasonality dynamics in the U. S.

Speaker 4

Moving to our biosimilars business, Revenue of $194,000,000 declined 4% at actual currency and increased 3% at constant currency. Quarter. Biosimilars volume increases were more than offset by negative currency impact pricing pressure. We continue to expect full year biosimilars 2nd. We are pleased to have launched BioViz this quarter in the U.

Speaker 4

S. And we recorded some modest initial revenue due to channel stocking. As a reminder, we expect a gradual launch of Biovis with more meaningful revenue contribution starting in 20 second. Total NICD20 revenue of $436,000,000 decreased 1%. Revenue from OCREVUS royalties increased 14%, which was more than offset by continued Rituxan declines due to biosimilar competition.

Speaker 4

Now moving on to expense quarter and the balance sheet. 2nd quarter non GAAP R and D expense was $529,000,000 including $18,000,000 in upfront payments related to quarter and full year 2018. This is compared to $585,000,000 in the Q2 of 2021, Which included approximately $50,000,000 in upfront payments. Non GAAP SG and A was $570,000,000 including approximately $29,000,000 related to Aduhelm. This is compared to $635,000,000 in the Q2 of 2021.

Speaker 4

2nd quarter collaboration profit sharing was a net expense of $29,000,000 which includes $58,000,000 of net profit sharing quarter. We are pleased to announce that the acquisition of the company's first quarter results were partially offset by reimbursement of $29,000,000 from Eisai related to commercialization of Ajehelm in the U. S. Non GAAP other expense was $29,000,000 primarily driven by interest expense. GAAP other income was $429,000,000 which included two items of note.

Speaker 4

First, we recorded an approximately quarter and $5,000,000,000 gain on the sale of our equity stake in the Samsung BioEPS joint venture. Quarter. In addition, we recorded $900,000,000 plus estimated fees and expenses related to an agreement in principle to resolve previously disclosed qui tam litigation relating to conduct prior to 2015. This agreement in principle does not include any admission of liability and is subject to quarter and we expect to make the payment shortly after the agreements are finalized, which we expect quarter to be as soon as possible and within the next 12 months. In the Q2, we generated 737,000,000 quarter.

Speaker 4

Capital expenditures were $37,000,000 and cash flow was $37,000,000 We repurchased 2,400,000 shares of the company's common stock during the quarter for $500,000,000 quarter with $73,000,000,000 in debt, dollars 5,500,000,000 in cash and marketable securities and $1,400,000,000 in net debt. In July, we repaid our senior notes due September 2022 with an aggregate principal amount of $1,000,000,000 quarter. Of note, as of June 30, we finalized approximately $71,000,000 of work in process inventory related to lucanumab. We plan second. We continue building inventory over the coming months and we are also offering raw materials associated with this production.

Speaker 4

If the leucanumab Phase 3 study is negative or quarter. If you look at the Q1, we would expect to expense inventory on hand at that time as research and development expense subject to cost sharing with Eisai. Overall, we remain in a very strong financial position with significant cash and financial capacity, including a $1,000,000,000 drawn revolving credit facility to invest in growing the business over the long term. Quarter. Let me now turn to our updated full year 2022 guidance.

Speaker 4

We are increasing our full year revenue guidance from our previous range of 9,700,000,000 quarter to a range of $9,000,000,000 to $10,100,000,000 and increasing our full year non GAAP diluted EPS guidance from our previous range of $4.25 to $16 to a new range quarter of $15.25 to $16.75 This guidance increase is primarily a result of better than expected top quarter performance and continued cost management. This guidance assumes that foreign exchange rates as of July 15th will remain in effect for the remainder of the year, net of hedging activities. Quarter. Importantly, we are raising our revenue and EPS guidance ranges despite some meaningful currency headwinds, which were not included in our guidance at the beginning of the year. Quarter.

Speaker 4

Specifically, subsequent to issuing our most recent guidance on May 3, we have experienced a headwind of approximately $55,000,000 second quarter and $0.20 to EPS due to currency fluctuations from April 29 through July 15. This is in addition to a headwind of approximately $20,000,000 to revenue and $0.35 to EPS due to currency fluctuations between January 1 April 29. Quarter. These currency headwinds are primarily due to strengthening of the U. S.

Speaker 4

Dollar relative to other currencies in which we transact. Quarter. This financial guidance assumes continued declines in RITUXAN revenue due to biosimilar competition as well as continued quarter. We expect to continue to expect the impact of TECFIDERA revenue in the U. S.

Speaker 4

Due to generic entry. Further, this guidance reflects a range of synergies for the impact of TECFIDERA in the EU, which is difficult to predict. We are aware of a small number of generics that have launched to date and we are monitoring the situation. Call. We assume we will utilize a portion of the remaining share repurchase authorization of $2,300,000,000 throughout the remainder of the year.

Speaker 4

Please see our press release for quarter and full year guidance. In summary, we continue to execute well across our core business and are pleased to be raising our financial guidance for the year. Quarter. We remain focused on delivering results and are optimistic about the potential opportunities ahead of us that we believe can create long term value for shareholders. We will now open the call for questions.

Speaker 1

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

Speaker 5

Hey, guys. Thanks so much for taking my question and congratulations on the nice quarter. So we noticed that And you discussed this a bit that you have been discontinuing pipeline programs maybe a little bit earlier on, including 104, 100 and 76. Just wondering if you could maybe comment on that, whether this reflects any change in your philosophy on risk assumption and gono go decision With respect to pipeline prioritization and maybe how if that might imply anything for your bar to pursue approval of leucanumab if the Phase 3 study misses

Speaker 3

Priya, we'll give some color.

Operator

Thank you, Brian for that question. So as we've mentioned last quarter, we've embarked upon a very focused and disciplined prioritization of the R and D portfolio. Call. But it is dependent on internal inflection points as well as external scientific insights. So I want to specifically pick Couple on the points that you made about BIIB-one hundred and four.

Operator

We just shared that we will be discontinuing development of BIIB-one hundred and four, Which is an AMPA potentiator in CIAS, which is cognitive impairment associated with schizophrenia. And that is because we had a readout from Tali where we saw expected pharmacological exposure,

Speaker 4

But we

Operator

did not meet the primary or secondary endpoints. So we believe that we have tested the hypothesis really well here And that it's time to reconsider the data, look at it very carefully, think about other applications, but ensure that we allocate resources To the programs with higher probability of success. So that addresses that question. With BIIB76 that you also mentioned, It's an anti tau antibody with our partnership with Neuroimmune and we did announce that we are closing down development at Biogen for it. So I would ask that you direct further questions of next steps on BIIB076 to Neuroimmune.

Operator

But from our perspective, we are focusing, for example, on BIIB080, which is our antisense oligonucleotide that affects all post translational forms of tau. And we will be starting a Phase 2 late stage, mid stage trial later this year. So that's how we're thinking about our prioritization. And finally, to address what it does for our bar on Alzheimer's, I'll just say that We look forward to the results of CLARITY AD for lekanamab. It is a well powered, well designed trial.

Operator

It has we believe the right primary endpoint in CDR sum of boxes. And we think that a statistically significant difference versus placebo Would be clinically meaningful because of the instrument that's being utilized as a primary endpoint and also all the secondary endpoints. And in addition, we have a whole comprehensive program around leucanumab, which addresses pre symptomatic patients as well as we're looking at maintenance Along with Eisai and Phase 2 open label extension and subcutaneous. So I think we will just wait for the data. As we have said, we expect to complete the filing along with clarity, AD, should it be positive by Q1 2023.

Operator

So I hope that answers the question. Thank you.

Speaker 3

And if I may add, we are delighted to be progressing with the filing of zuranolone and Leka And waiting more data also for Adeo. For the earlier pipeline, we have expanded materially our pipeline. It's natural That first of all, there is inherent risk with neuroscience and it's natural that we always try to increase probability of success And select based on trigger point and science inside and this is what Priya is doing.

Speaker 1

Segment. Thank you. We'll take our next question from Matthew Harrison with Morgan Stanley.

Speaker 2

Great. Good morning. Thanks for taking the question. I just wanted to follow-up On lucanumab, so I guess the key question that I've been getting a lot is, in the discussions with the FDA around 2nd. Using a single confirmatory study here, do you have explicit feedback from the regulators on the p value necessary here or is that going to be a review Thank you.

Operator

Thank you, Matthew. So just to step back, lekanumab Has completed is in the filing for accelerated approval pathway using the Phase 2 study, which is the 201 study. And we are expecting results for CLARITY AD, which is the Phase 3 study. This is a study with 17 95 subjects. It's a global study.

Operator

We believe it's well powered. There is no interim futility analysis. It will be just a primary readout sometime in the fall of this year 2022. And currently, this has an underrepresented population also quite similar to the CMS population of about 25% included. Now with regards to whether it can be a confirmatory study For traditional approval, yes.

Operator

We do believe we have this agreement that should it read out positive, It can be the confirmatory study, so I do believe that that is exactly what we believe. In addition, I'll just remind us that in the aducanumab briefing document. The FDA had stated that they would accept a statistically significant change on an inherently meaningful instrument such as the CDR sum of boxes as evidence of a clinically meaningful effect. So this is really important and we feel quite confident that CDR sum of boxes is the right primary endpoint. It is clinically validated And it combines both cognition and function and is widely accepted as a registrational endpoint.

Operator

So we are at that point. We feel quite good about the fact that it's well powered. Of course, we have to wait to see the results. I hope that answers the question.

Speaker 1

Thank you. We'll take our next question from Collin Bristow with UBS.

Speaker 6

Hey, good morning and congrats On the quarter.

Speaker 3

So just on the CEO search, could you give us an update on where you are in this process?

Speaker 6

And if you're able to now provide a And just within that question, given how important leucanumab is to the company and the trajectory, is it reasonable to expect that a new CA would not be in place Until after the outcome of the trial is known. Thanks.

Speaker 3

Thanks for the question. From my discussion earlier week with the Board members and our Chairman, I hear that the search is progressing as planned, But at this stage, there is nothing yet to be reported. And obviously, we'll not speculate on lekadimab. That is a very important event. But at this stage nothing more to report.

Speaker 1

Thank you. We'll take our next question from Michael Yee with Jefferies.

Speaker 7

Thank you. I had a question around thoughts around investment into SG and A and how that works for lakanumab and whether there's a decision point as to your commitment to have to reimburse fifty-fifty and how that works If the drug actually gets to market? And then secondly, as that relates to zuranolone, same thing. Is that a proposed net investment spend for 2023. How do we think about that?

Speaker 7

Thank you.

Speaker 4

Yes. So, So, you would expect that we certainly will be building infrastructures to support, Hopefully, the successful launch of both of those products and we share costs in both cases fifty-fifty. 2nd. We're very focused on managing our OpEx. Currently, the 2022 guidance implies a midpoint of about $4,600,000,000 versus 5 point Last year progressing well on the cost measures that we've committed to.

Speaker 4

And then, of course, the commercial infrastructure around those two products or key items that we're working very closely with both Sage and Eisai on, particularly as it relates to planning for 2023 and beyond.

Speaker 1

We'll take our next question from Umer Raffat with Evercore.

Speaker 8

Hi, guys. Thanks for taking my question. How do you intend to approach the lekanamab Phase 3 data set if The primary endpoint does not work, but a secondary like ADCOMS or ADAS COG or perhaps a subgroup like APOE4 carriers is active. And How would that impact your FDA submission?

Operator

Thank you, Umer. So maybe I can step back to say that we obviously there are several scenarios of the data readout. And I think at one end, we have Potentially a positive primary endpoint outcome with secondary endpoints as well. And we believe that the totality of the data will be really important. And as I said already, we do have we have discussed this and we have agreement with the FDA that a positive readout could SIRV for a confirmatory study.

Operator

And on the other end of the spectrum, it's possible that the study is negative. And in that scenario, we would be looking at also the other readouts because there are 2 these are obviously Biogen Eisai readouts, But I will also draw attention to the fact that we have 2 other anti amyloid agents reading out in the near term. 1 is gantrenumab And the other is Donanimab as everyone knows. So really this is a bigger question about these readouts and what they mean For the anti amyloid hypothesis in Alzheimer's early Alzheimer's disease. There could be several mixed scenarios, Some like you mentioned.

Operator

And I think it will be very difficult to speculate exactly how that might be perceived. So I would say that the mix scenario, There could be several permutation combinations, but I think that the totality of the data is going to be important. So at this point, it would be tough for me to speculate on what mix scenario and what outcome it could lead to. But we are considering all of this and I think currently our focus is on ensuring that we collect the data, close the study, have a very clear readout and then we will be engaging of course with the FDA Because this product also has breakthrough and fast track designation, which allows us to consult the FDA for the guidance. So we will be in close contact and that's what I can tell you.

Operator

Thank you.

Speaker 1

Thank you. We'll take our next question from Mark Goodman with SVB Securities.

Speaker 9

Yes, good morning. You keep referring to the growth opportunity in Markets, can you just help us size how big is the business? How has it been growing? What are the key products What are some products that have yet to launch there that's in the pipeline that can be look forward to growth there and just give us a sense of You know where this business is going to be in 3, 4 years. Thank you.

Speaker 3

So before Mike gives provides more color, The important element is that the epidemiology is pretty similar in this in the West in emerging mature markets. So our portfolio is very relevant to this part of the world. The second point is that we see a very strongly emerging middle class that is able to afford, able to co pay and is willing to access Best Education and Healthcare. And the experience we have so far with our expanded footprint since a few years in Latin America, in Asia Pac, in the Middle East is that we see a very good uptake of our MS portfolio even if we thought at the outset That in Asia Pac, it was a bit lower incident. But based on the number of the population, these are very feasible opportunities.

Speaker 3

We see a very good uptake and also for SPINRAZA. So good opportunity. We have a professional team. Compliance is very important everywhere, but also in this part of the world. So we secure that we have a very good balance between where Biogen is directly and where Biogen is partnered.

Speaker 3

But we have a very good performance To date with a strong double digit momentum. Mike?

Speaker 4

Yes, not a lot to add, Mark. I would say that we're pleased With a couple of markets that I would call out, one being China, the other being Brazil, in particular China. We're seeing excellent uptake on SPINRAZA, it's not a huge revenue contributor due to pricing dynamics there. But I think overall, the majority of our international growth has been around SMA. But as Michelle said, Growth has been around SMA, but as Michelle said, there's opportunity in MS as well, and that's something that's gone from a very small revenue base to a respectable number as we sit here in 2022 and growing in the years beyond.

Speaker 4

So we're hopeful that we can continue to grow it meaningfully for the next several years.

Speaker 1

Thank you. We'll take our next question from Salveen Richter with Goldman Sachs. Good morning. Thanks for taking my question. Could Could you provide us any updates on how you're thinking about pricing and branding of zuranolone and thoughts here on how a potential Schedule 4 could impact utilization?

Speaker 3

So first, we are very encouraged by the data. I'm delighted to see the 2nd study in postpartum, 4th study in major depressive disorders. We have the opportunities to meet many constituency and this disease is affecting So many people. So it's so relevant. If I'm not mistaken, the U.

Speaker 3

S. More than $19,000,000 as Priya said, An incidence for PPD close to 500,000 every year. So extremely relevant. We are making a lot of progress on the positioning, On understanding the patient journey and the different segments of the market between the naive and the failures To treatment the way we know in this massive market due to side effect or lack of efficacy. I hope that in the near future, we'll be we'll have an opportunity Together with Sage to have a dedicated session with you to update you on where we stand and we'll come back to that as soon as we can.

Speaker 3

Concerning the price, we are not yet there. We are making some our homework, but nothing to add yet at this stage.

Operator

I can address the scheduling question. Thank you, Salveen. So I just wanted to say that if we step back, The DEA process is quite robust and they will this is typically takes about 3 months at the end of the approval process. And they will designate a schedule. Now Sage has already completed their human abuse liability potential study, as I mentioned in my opening comments.

Operator

And there could potentially be 5 schedules that you could get. At present, what we do know is the data that we have and we also have the background of ZULRESSO, which is a Schedule IV drug. So at this point, we do believe that it is possible for zuranolone to get a Schedule 4. And Schedule 4 is typically what it means is low potential for abuse and low risk for dependence. The other drugs in this category are Ativan, Xanax, Darvocet and others.

Operator

And we believe that this is currently the expected scheduling. Of course, we have to wait to go through the process to see what the outcome will be, But that's what we expect at the moment for the data we have. I hope that addresses it. Thank you.

Speaker 1

Quarter. Thank you. We'll take our next from Robin Karnakos with Truist Securities.

Speaker 10

Hi. Thank you guys for taking my question. Sorry, I'm losing my voice. So I know you've talked a lot about staying within the current pillars of neurology And maybe also immunology. I was just wondering, if you think about derisking the portfolio and maybe going out By those pillars, what are your current thoughts about that now given you've had 3 months to think about it?

Speaker 10

And then I guess the question that goes along with that is, Would you make that decision after you'd hire the final Head of R and D and CEO? Thanks.

Operator

I can get started. Thank you for the question. So just stepping back, we have at Biogen, we've got vision towards a multi franchise portfolio. And R and D, our pipeline, I believe, is quite second. Strong and diversified and robust.

Operator

We have 29 programs in the clinic, many more in our discovery and exploratory portfolio where we look At the diseases that we want to be leaders in and we think about the targets and the biological pathways that we may want to address with our platform actually of multiple modalities. So that's the other strength we have. We could be agnostic to modality because we have access to biologics, small molecules, antisense oligonucleotides as well as gene therapy. So that's sort of at a high level. That's how we think about our R and D portfolio.

Operator

Now within that you spoke about neuroscience. This is an absolute core strength that we have. It's a very hard space. I would acknowledge. I think we would all acknowledge it, But we've had a lot of success in this space, both with multiple sclerosis as well as with, spinal muscular atrophy.

Operator

And potentially we could have success with Alzheimer's and certainly we have zuranolone in depression. So we are thinking about this as neuroscience, Potentially increasing our focus in neuropsychiatry where we've got now a product that is in filing for both MDD and PPD with a large high unmet need. And we are looking at other potential indications for the GABA pathway that zuranolone addresses. So zuranolone could really be much more than just MDD and PPD and we're looking at that as well in our portfolio prioritization. Shifting over to specialized immunology, we have 3 Phase 3 trials and this is really important with 2 products.

Operator

So we have our homegrown BIIB059, which where we understand the biology and the pathway really well. We think it could be 1st in class, best in class for CLE, cutaneous lupuserythematosus, but also for SLE. And then we have DAPI with our collaboration with UCB, also in Phase 3. So this is a comprehensive sort of portfolio just in SLE and CLE. There again, we are thinking about Where else do we understand the Type 1 interferon signature?

Operator

Where else could we have potential indications with BIIB059, for example, in other specialized immunology indications. That's our core focus currently. And then finally, I'll say that within neuroscience, We think we can be leaders in Alzheimer's, depression and retain our leadership in MS and SPINRAZA. SMA, we have already second. Discussed externally are opt in for BIIB115, which is a follow on ASO with potentially a once a year dosing.

Operator

So that could really be very, very important. We are accelerating that as much as we can. And We have MS where we continue to think of BTK inhibitors. So we have a peripheral BTK inhibitor. We also have a central BTK inhibitor call.

Operator

And we will continue to look at the emerging data and make decisions. Beyond this core R and D portfolio, as Michelle mentioned, We also have our biosimilars and our digital therapeutics. We've just made a foray with MedRhyms. And I think that this All together is a very diversified portfolio. The area that we've increased a lot of focus As soon as we have, for example, we had the BIP-one hundred and four readout.

Operator

We're now thinking of what else we would do with that glutameric Pathway and the data that we will gather from there. Similarly with BIIB059 and zuranolone as I mentioned, how would we allocate resources to that? What would we prioritize? So we are doing this in a very systematic fashion and it's a call out to the R and D and the entire One Biogen team to really be doing this very well. I hope that gives you a flavor of how we are approaching it.

Speaker 3

Thank you, Priya. And to bring that together, What is very important for us to set the strategic direction is to clearly understand the key capabilities that we have within the company throughout the value From the early research, clinical development throughout to commercialization and customer engagement. And as Priya said, today, we believe that we are pretty well diversified compared where we were 6 years ago in neuroscience, 2nd. In specialized immuno, in biosimilars and emerging digital therapeutics capability, we have 29 programs standing Phase 3 of File Products. The question is how did we derisk in addition and this is what Priya started to work on.

Speaker 3

Obviously, a new CEO and a permanent Head of R and D will have an opportunity to revisit this strategy together with the Board.

Speaker 1

We'll take our next question from Cory Kasimov with JPMorgan.

Speaker 11

Hey, good morning guys. Thank you for taking my question. Going back to Alzheimer's for a minute. So in the face of the recent NCD and with the CLARITY study obviously pending, how do you think about the relative importance of the January PDUFA for lucanumab for accelerated approval that's based primarily on Phase 2 data. And has the FDA given any indication that they'd convene an AdCom for this initial application?

Speaker 11

Thanks.

Operator

Thank you. Thank you, Cory. So firstly, I think that just to step back, we have quarter. Filed according to the accelerated approval pathway with the Phase 2 data as you mentioned, Corey, and the PDUFA date for that is January 6, 2023. Now, CLARITY AD will read out in the fall of this year.

Operator

And should it be positive, it will be the filing for traditional approval will be completed per what Isai has communicated by the end of the Q1 of 2023. In addition, I think that the totality of the information and the data will matter for the outcome. At the moment, we have we do not have an indication that there will be an advisory committee at this moment. We do not have that indication. So that's what I can tell you on about that.

Operator

I hope I addressed all the aspects of your question.

Speaker 1

We'll take our next question from Jay Olson with Oppenheimer.

Speaker 11

Hey, good morning and thank you for the update. Can you talk about why BIV-one hundred and four did not meet the primary second. And would you consider BIIB-one hundred and four for a study in other indications? Thank you.

Operator

Thank you, Jay. Great question. So yes, we are very disappointed with the negative readout for BIIB104. And just to step back, the hypothesis that we were testing was that AMPA potentiation can impact NMDA hypofunction, NMDA receptor hypofunction and thereby increase Synaptic Connectivity and Increase the working memory domain impact the working memory domain positively in cognitive impairment that's associated with schizophrenia. So that was the hypothesis.

Operator

And we were looking forward to the results. Of course, it Has not met primary or secondary endpoints. Now in neuropsychiatry trials, sometimes you don't have the right adherence and compliance during the trial. So we have looked very carefully at the PK exposures and such. And this was a 12 week readout.

Operator

So we have looked At that and we have quite we feel quite confident that this was a very high, highly compliant trial where we have expected exposures For BIP-one hundred and four throughout the 12 week duration. So we believe that we have tested the hypothesis of AMPA potentiation leading to NMDA potentiation as well. Having said that, we think that this was an extremely well run trial And we have collected a very rich data set that can give us leads on how we might want to pursue the glutamurgic pathway In other neuropsychiatry indications. So yes, that is something that we are looking at very carefully and we will be evaluating this very carefully. 2nd.

Operator

We did have early Phase I trials, but that data was unfortunately not replicated. Now these were very small trials. 1 was in healthy volunteers and the other one was in schizophrenia patients, but they were shorter duration And the subject numbers were 3929 respectively. So very small trials. So yes, to your question, neuropsychiatry remains 2nd area of high focus.

Operator

We believe we've increased our capabilities and focus in this area and we'll continue to look at this very high quality data set And we'll also be presenting it at upcoming medical meetings.

Speaker 1

Thank you. We'll take our next question from Phil Nadeau with Cowen. Call.

Speaker 11

Good morning. Thanks for fitting us in. A follow-up to Cory's question, but directed specifically at Mike. Mike, how does Biogen feel about Putting resources behind the leucanumab launch, what would be the timing of an infrastructure build in a true launch of the product? Would it be After accelerated approval, after full approval or it does seem like now there's another step within NCD likely to come at some point.

Speaker 11

So When would Biogen feel comfortable in really investing in the commercial infrastructure for this program?

Speaker 3

So before Mike jonsin, I would like to say that we work in full and close collaboration with our partners at this site That we are approaching a global launch, not certainly a U. S. Launch. And we anticipate the filing in Japan and EMA to take place during the first half of twenty twenty three. So this will be a global launch.

Speaker 3

And obviously, as we know, there is a sequential process here between an accelerated approval and a Potentially full approval after that. Mike?

Speaker 4

Yes. I think Michelle covered a lot of it in terms of the question, Phil, but I would just say that as a reminder, that we and Eisai expect the Phase 3 readout for leucanumab in the fall of 2022. The PDUFA date is in early January of 2023. As you know, as currently written, the national coverage determination does second. Significantly limit the market opportunity for antibodies with accelerated approval.

Speaker 4

And so as Michelle said, we will closely align with A side to resource appropriately. We'll take learnings from Aduhelm as necessary and as where we can, And we'll resource it at each phase of its commercialization very gradually as leucanumab is launched. I'd say that Obviously, we did make the decision to take down the Aduhelm commercial infrastructure because we felt the time gap was too large To the timing of when we would need it for leucanumab, and I think that that was the right decision. We feel like we can rebuild the infrastructure In a more gradual fashion and fairly quickly, when we're ready. And again, that's something that we'll partner very closely with Aision.

Speaker 3

I think that It will very much be dependent on the quality of the data. If the data clarifies and confirms without any ambiguity That removing the plaque is correlated with the slowing down of cognitive decline and reinforces the hypothesis, I think arrows will align faster than what we believe.

Speaker 4

Yes. And the other thing to remember here, this is purely from an accounting standpoint and it ties back a little bit to the question that Vicki, yes, earlier. Just as a reminder, all of the revenue costs, everything will be aggregated and Our 50% share will be reflected as a one line revenue item for lecanumab.

Speaker 1

We'll take our next question from Geoff Meacham with Bank of America.

Speaker 11

Hey, guys. Thanks so much for the question. Just want to follow-up on some previous questions on ritinumab. You guys have talked about the U. S.

Speaker 11

Opportunity already. But how much of a discussion have you had with EU or Japanese regulators just on the risk benefit bar? I wasn't sure if Your prior discussions from Agi were able to give you some insight there. Thank you.

Operator

Thank you, Jeff. So, Eisai has communicated that they will be completing the filing in both Europe as well as in Japan by the end of Q1 2023, very similar to the U. S. Timeline. This is of course post CLARITY AD readout should be positive.

Operator

And in line with that communication, all the communications with regulators around the world, They are in line. They have been in consultation. In Japan, Eisai actually has communicated and we have communicated previously That they have been part of its prior consultation process. Now the prior consultation process in Japan has the ability To really expedite the review process, should the data be positive. So that's also taken place.

Operator

So all the everything is on track to complete the submission. Benefit risk will always drive the discussions. And we believe that the trial is set up and well powered and well designed to give us an answer on A clinically validated instrument. So we believe that it is set up well. We of course, the rest will depend on the data.

Speaker 1

We'll take our next question from Evan Seigerman with Bank of Montreal.

Speaker 5

Hi, guys. Thank you so much

Speaker 12

for taking the question. Just looking ahead to the CLARITY ID trial. What do you think CMS needs to see from that trial to potentially revise the NCD? I know there's a lot of discussion on the call, I'm wondering is that sufficient to essentially open up access in the Medicare population? Thank you.

Operator

Thank you, Evan. So I think that before we kind of before I answer that directly, it would be important for us to kind of reiterate The final NCD indicated that antibodies with full approval may be covered in CMS approved prospective comparative studies But that this data could be collected in a registry. Now what is left open to interpretation here is their next point that they made, which is that the degree of rigor in these study designs may depend in good part on the strength of evidence of the initial randomized controlled trial that led to FDA approval. This aspect we feel quite good about because we think that the trial is well designed and well set up and well powered to give us a readout. So we believe that if the trial reads out positive, That is the clarity AD that there would be a chance that it would meet the high level of evidence bar that NCD has put forward from that CMS has put forward in the NCD and that they could potentially reconsider for full coverage.

Operator

The other aspect to consider here is that there are 2 other readouts coming in the same sort of timeframe, which could also influence how CMS looks at their guidance and what they designate as a high level of evidence. So it's not clear to us at this point, but it will depend on each molecule Phase 3 data is my personal interpretation on this. Now, as Isai has announced, Claroty has a robust design and they believe that it could meet the high level of evidence set forth by CMS in the NCD memo. So we do think that it could be reconsidered. And I think the High level of evidence would have to include safety, efficacy, underrepresented population that mirrors The CMS population.

Operator

In addition, I would say that the population in the CLARITY AD also has Comorbidities and concomitant medications not very dissimilar from the CMS population. So I think these things set us up well and they bode well. I think final outcome will depend on the data.

Speaker 3

And to add to what Priya said, beyond the solid design, There is an open label extension that will add some information. There is also a preclinical trial ongoing for the earlier population and life cycle management opportunities with new Ketanese formulation also on the way.

Speaker 2

And that will conclude our call today. Thank you everyone for joining us.

Speaker 1

Call. We appreciate your participation. You may now disconnect.

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