Biogen Inc. (BIIB) Earnings Call Transcript & Summary

So the future of Biogen is not defined by tech anymore. And we love TECFIDERA, and TECFIDERA continues to do well, ex U.S. And the opportunity that we may have with aducanumab and the rest of the portfolio, as discussed earlier, outweighs big time in terms of growth opportunity, value for the patient and shareholders, the potential loss of one product in the U.S., as painful as this can be. So it's all about a potential reshape and how we rebound. And I can tell you, the organization is ready. And everything that we have done so far, as discussed earlier, is playing off pretty well in terms of prospect. So it depends. The erosion profile will depend on the number of generics and the aggressivity, but we compete. We have opportunities and tactics to do things the right way, the Biogen way to compete, but patients that are stable on TECFIDERA cannot be switched. And otherwise, we have an upgrade based on clinical profile with VUMERITY that is improving. And I committed to you guys that we'll do everything we could to improve VUMERITY for this to become a sustainable product for the future. More to come during Q3. But beyond this dynamic, I would say, of a potential fast erosion of the blockbuster in the U.S., there are plenty of opportunities. You read the ECTRIMS release that we made and all the life cycle management opportunities that we have on the entirety of our portfolio. SPINRAZA continues to have nice days ahead of it, and biosimilars too and all the other opportunities. And beyond that, there is a pristine balance sheet. So the organization strategically is in a good place, and it's not TECFIDERA that defines the future. It's everything that is coming ahead of us that was planned that we work on systematically and diligently without making any shortcut that is playing off pretty well for the coming months, hopefully.

And can -- you touched on balance sheet. Can you just touch on a BD a little bit? I mean does losing -- let's just say, TECFIDERA rapidly arose. Does losing that product make you more aggressive on the BD side for a late-stage deal or an end market product?

Yes, I mean, Matthew, if we have the opportunity and the responsibility to launch aducanumab and launch aducanumab well, this will take the focus of the organization for the foreseeable future. And as discussed earlier, I don't think that we need a $20 billion acquisition in order to regain momentum based on all the work and all the data readouts and all the products launch opportunities as pioneer in neuroscience in all the disease states that we spoke about that we have in front of us. Having said that, our BD team is working very hard and spending a lot of time on assessing many opportunities with the support of the Executive Committee and our Board. We are very pleased with the mid-stage of Denali deal, the Denali deal that we've made. We are evaluating others always in the best benefit of our shareholders.

Okay. And look, notwithstanding your confidence around aducanumab, but investors like to think about different scenarios. So there obviously exists a scenario where aducanumab doesn't get approved and you've lost TECFIDERA. What do you do in that scenario in terms of your aggressiveness around BD?

We are committed, certainly, to continue to engage productively with the regulator. So far so good. The probity of success is improving. We are focusing on the advisory committee. And we are, as a sign of confidence, the way you said, we are building up the commercial organization in the U.S. and ex U.S. We have many readouts, and we have a strong balance sheet. So we have opportunities to do and eventually to do more. But let's look at the glass half full based on the engagement and my communication to you, based on the stage of our engagement with the U.S. regulator.

Okay. Thank you. I want to talk about the rest of the pipeline because you obviously have a handful of other readouts upcoming in the next 6 to 18 months. But maybe just 2 other MS questions before we get to that. You've obviously had another CD20 approved ofatumumab. How do you think about that impacting your business and also maybe your royalties on OCREVUS?

Yes. So the class becomes very crowded. With DMTs, I remember 5 years ago how it was. What Biogen has demonstrated is that we are able to compete. And our products are extremely well-characterized in terms of efficacy and safety profiles and continue to do well in the face of competition, and we have a very strong team. Now this other DMT is welcome because it brings another opportunity for patients and clinicians. So it's another anti-CD20 that may have potentially some benefit in terms of dosing vis-à-vis Ocra that may have, as a class, some limitation in terms of beta cell depletion in the face of a pandemia. We'll see. It's another DMT. It's still early, but the Biogen team focuses on the benefit of our portfolio and we are not too worried because there is another high efficacy product.

Okay. Okay. And then I guess, second question, as we head into the fall and winter and you think about formularies for next year and pricing, I mean any shifts that you're seeing across the market in terms of how insurers are dealing with MS products?

This is a recurrent question, and we've been always worried. As long as we can innovate, we continue to do well. And for MS, it's a heterogeneous disease, and one product cannot be subsided by the other except the generic vis-a-via the originator potentially, but we don't see a class effect or a large impact across all the DMTs because certainly, there is a generic or certainly, there is something else. So this -- there is no reason to believe that this will change the day after tomorrow.

Okay. Okay. So pipeline, maybe we'll start -- you recently signed a sizable deal with Denali, and that brings you 2 things, a small molecule for LRRK2 as well as potential access to their blood-brain barrier platform. Maybe you could touch on what you see is the opportunity for LRRK2, but I'm more interested on what you think about the opportunity for drugs that you can increase -- antibodies that you can increase to get across the blood-brain barrier and how you plan on potentially using that technology?

Very exciting, fascinating, but before I jump in just a few words. You spoke about potential leadership in Alzheimer's and here potential leadership for the second most important neurodegenerative in terms of epidemiology disease, its back in some, more than 10 million patients. I'm delighted about this partnership with the premier neuroscience research-based company with a great team, a great leadership on the LRRK2 compound lysosomal modulation that could bring potentially first oral for the treatment of this devastating disease and adds breadth and depth to our Parkinson's presence because we still have our ASO LRRK2. We have alpha-synuclein info, which will have some readout in next year. And we have also symptomatic treatment. So Biogen is well positioned. And as you mentioned, this platform of blood-brain barrier transport vehicle is very exciting because the blood-brain barrier is here for something to prevent the penetration and protect the brain. And here, if you find a way because we, in therapeutics, we want to reach the deep tissues eventually in the brain, and this is very exciting. We have 2 programs in neurodegeneration that are committed, and we have also right of first negotiation for 2 additional ones using this transport vehicle. I mean if you think about this company, where they have achieved only in a few years in terms of having key products in the clinic and this platform that could transform the future of neuroscience and therapeutics. Very exciting.

Anti-LINGO, a product that I think we all remember sort of the first time around with anti-LINGO. And then obviously, you took it back into a more defined patient population, but I think we're getting closer now to the time where we could expect some data, again. How are you thinking about that product? What's your confidence in getting a data set that you can move forward with that product?

Yes. So I anticipate a communication by the end of the year. As we all know, this is, again, a high-risk pioneering field of repair and eventually rebidding the myelin around the Axon, and we did refocus in another Phase II, the target population. So by the end of the year, beyond anti-LINGO, there will be choroideremia as the Phase III during the first part of 2021. And then we have stroke ALS, lupus and also biosimilars without in the coming period.

I was also hoping you could comment on tau a little bit. And 1 of the things that I think investors are focused on is there's another anti-tau product that I think from Roche that we're expecting to maybe get some data on. In the near-term, thoughts on how that data could read through to your tau efforts and more broadly to your other mechanisms in Alzheimer's?

I think it could, based on the binding characteristic on the end terminus of the extra cellular tau. The aim is to eliminate this extra cellular accumulation of this toxic protein and eventually prevent the transmission from cell to cell. It's again pioneering investigation. And based on the banding characteristics, there could be some read through. Having said that, the clinical trials designed between the 2 companies is different. I think ours is much larger in terms of population and the [ biodispensing ] availability of the products is different between the 2 compounds. So there are some aligned features, but there are also some clear differences. Very excited to learn more. It's a pioneering work, applaud Roche for doing what they do. And it's an opportunity for all the community to learn the way we learn based on our failure, and we share that all our successes, and we share that with the community. Even if there are less and less players in neuroscience based on the high-risk profile, and I'm pleased that strategically, Biogen has a contrarian approach and specialization in terms of neurobiology, biomarkers, genetics, capability of the team in that vein, this will make the difference. Think about the epidemiology and the value creation opportunity.

Okay. Great. I think we probably have time for probably 2 more topics. I guess one of the other pipelines that you talked about was stroke. The street has historically been skeptical of stroke assets mainly because we haven't seen any work. So maybe you could talk a little bit about your efforts there and how you're thinking about those readouts in terms of those studies?

Listen, I love those -- this space. If you think about the pharmacology since the mid-1990s and tissue plasminogen activator, tPA, there was not much except the endovascular thrombectomy activity that is now available for 15% to 20% max of the 80 million incidents of acute ischemic strokes. So we have 2 compounds very exciting glibenclamide anti edema with some very interesting Phase II data on the midline shift and impact on the mortality that affects potentially 15% in terms of large hemispheric stroke, in fact, of the acute ischemic stroke. And then we have another compound that -- for which we have a readout next year, TMS-007, with a Japanese based institution, for which we had an option. And this will be -- could be potentially an improved tPA in terms of window of dosing and in terms of safety profile. So very exciting in monotherapy or potentially in combination with the endovascular procedure. Very excited by this. DPD immunology is huge. Mortality is up to 80%. If I'm not mistaken, 50% to 80%. It's very high. So -- and it's one of the first cause of mortality in the U.S. This is where Biogen is going, others are escaping high risk, huge reward.

Okay. So maybe final question. Can you just talk a little bit about ESG? I know you announced a new initiative, and I think you wanted to comment on that.

Listen, thank you for the opportunity. We are an industry that is aiming to save lives. And today, there are 9 million, every year, citizens dying early because of the impact of pollution and fossil fuel emission. So there is a huge paradox. And this is the responsibility of the public and the private sector that is really to take the lead and -- but for the pharma industry and for Biogen, we cannot, on one hand, aim to pioneer and save. And on the other hand, pull it and contribute to the impact. So if we were to eliminate the fossil fuel from the environment, life expectancy will increase by more than a year. The impact again in terms of mortality is even more than tobacco. And I'm worried when I see the reset post-COVID that we tried to come back to rebounding of the economy and all the metrics that are GDP, employment, et cetera, instead of looking at the environment at the same time. We have to change, look at what is going on around the world. So we are partnering with the MIT and Harvard, and we'll engage with the entirety of the employee base to transform the operation and also transform the way we operate as individuals at home or in the office. Very exciting, standing strong for our corporate responsivity and purpose. This is a good news. And it's a long history for the company. Biogen was carbon neutral in 2014. So it's a next level. It's a next step of ambition.

Great. Michel, thanks for being here today. Thanks for your comments. We very much appreciate it.

Thank you, Matthew.

All right. Bye.

Bye.