Biogen Inc. (BIIB) Earnings Call Transcript & Summary

Good afternoon, and welcome once again to TD Cowen's 2025 I&I Summit. I'm Phil Nadeau, one of the biotech analysts here at Cowen, and it's my pleasure to moderate a fireside chat with Biogen. We have with us today, Diana Gallagher, who is the Head of Clinical Development of MS&I and AD at Biogen. Diana, thanks for joining us today. I thought we'd start with maybe a few broad overview questions before diving into the programs in a little bit more detail.

Just first on I&I generally at Biogen, it's clear Biogen has reinvigorated its I&I efforts over the last couple of years. Why is Biogen's strategy -- what is Biogen's strategy in I&I and kidney? Why does Biogen thinks it makes strategic sense to be in these areas?

Sure. First of all, thanks for having me here, Phil. It's terrific to be here. And for that first question, I think in a lot of ways, although people often think about us historically as a neuroscience company, I think our success in MS has really relied on deep expertise in immunology, more specifically in neuro-immunology of the CNS. And so that really creates the groundwork upon which we're basing some of this. And I'd mention, too, that we have had some of our work in lupus for a decade, 1.5 decades, we've been working on some of these. So it's not brand new. I'd like to remind folks. And -- but the advantage, I think, of these drugs is, in many ways, to support a diverse product portfolio. So by targeting these immunological pathways, these drugs often can be applied to multiple disease indications. And so once we establish the safety and we understand how we're manipulating the biology, it allows us to sort of think about a multi-indication strategy, and that's quite attractive for us.

Can you talk a little bit more about how you think an I&I R&D pipeline should be structured? What's the ideal spectrum of risk, which therapeutic areas or diseases are attractive and which ones are not?

Yes. I think that one of the things we sort of like about immunology, in particular, is this idea of in these -- you sort of always are led by the science, right? Then you can develop these, you understand that target that you're going after. You think about the biomarker strategy that you're going to leverage. You can bring it into sometimes pretty efficient early development trials, maybe even pick an indication that you think really allows you to answer that biological question very crisply. And then you can use that to sort of expand out. So depending on the target, we may bring that into an indication where we sort of see like, hey, if we hit in this sort of -- if we manipulate biology in this way in this proof of concept, that gives us increasing confidence to expand into a multi-indication strategy. For some targets, we might start with 2 indications at the same time, and then that will -- if we hit those, it ungates others. You see us sort of doing that with felzartamab, I think, pretty effectively. So that's sort of the idea of how we're strategizing it.

Based on our conversations, we suspect investors don't give Biogen much value for its immunology and kidney pipeline. Why do you think that is? What do you think investors are missing?

Yes. It's hard to know. But I think if you look at felzartamab, it's a really, I think, very carefully crafted sort of approach that exemplifies what I've just discussed. You have an anti-CD38 antibody, very well-reasoned rationale of how it should manipulate biology in kidneys. You have a really unique indication in antibody-mediated rejection with a very robust biopsy endpoint. So that was very efficient in an investigator-initiated study to basically say, hey, this really manipulates this biology, which gave us the confidence to then go into additional Phase III studies with a lot of weight of evidence. And then similarly, at the same time, take it into more indications where there was a more established traditional biomarker path and regulatory path in IgAN, but we looked and what's beautiful, you run a study like that, you look at the urine to protein creatinine ratio, you say, "Hey, I know if I hit that, that's going to translate into EGFR. I know what the regulatory path looks like for that. So you really understand that sort of all the way from the dosing the drug to hitting the biomarker profile to understanding what the product profile looks like pretty efficiently in both IgAN and PMN. So I think that was 3 for 3 figuring that out, which was a really nice thing to see.

Are there other indications that are yet to be announced that Biogen thinks felzartamab could work in? Anything -- I know you can't tell us what the indications are, but are there other potential areas of application for anti-CD38?

There definitely are, and I think there's a lot of folks thinking about those. One that we recently sort of articulated was the MVI. So not just the antibody-mediated rejection endpoint that we've already started our Phase III, but sort of expanding into microvascular injury in the kidneys, which is on the spectrum towards full rejection. And as you can imagine, the idea that we, for solid organ transplant are able to really meet that need and really attenuate rejection is important. So that MVI in addition to -- microvascular injury in addition to antibody-mediated rejection is one of the first things that we're pushing into and considering others as well.

Great. Maybe turning to lupus, which you referenced Biogen has been in for quite some time. Obviously, the late-stage pipeline currently has 2 candidates in it, dapi and litifilimab. Historically, lupus has been a very difficult indication for companies to succeed in. What does Biogen -- why does Biogen have confidence that it could succeed where these others have failed?

Right. It's a great question. I think that our confidence is really data-driven. So maybe I'll start with litifilimab. So that's a homegrown molecule that we brought forward, did a very detailed sort of Ib study back in the day where we had skin biopsies where we're really following that paradigm I just told you about, do we manipulate biology? Do we understand how to pick the doses? We did that. Then we moved it into 2 proof-of-concept studies in the LILAC trial, which is sort of a combined trial, but we showed in back-to-back New England Journal articles back in '22. Here's how we're manipulating biology in SLE, an overall treatment effect as well as showing good data on skin and joint. And then in CLE, which is an indication area that we've really been sort of committed to for a long time and are very proud of because there's no approved therapies for cutaneous lupus. So we had POC there. So that allowed us really those well-conducted early development studies plus robust POC allowed us to feel like we understood how to sort of -- that we should and then how to move forward into what are 2 Phase IIIs ongoing for SLE and then a II/III for CLE. So very data-driven. And I would also say you learn by doing. I mean when we first started in lupus, we were all as a field, trying to understand the clinical development paradigms, trying to understand the inclusion and exclusion criteria, trying to understand how should we manage the background medicines, how should we do the steroid tapering. So a lot of clinical like trial execution excellence in addition to having the right molecule. So all of that, I think, has come around and kind of coming at the right time for us. And then for dapi, litifilimab, we have a positive Phase III. So the confidence there comes from being a great target in a CD40 ligand, which broadly manipulates sort of biology, enrolling the right patients. So it's moderate-to-severe lupus who've been actively flaring and designing a well-powered trial in the first PHOENYCS GO trial that we saw that said, hey, you hit the primary endpoint in BICLA. But also we were really happy to see we're affecting flares or reducing flares, which is really important to patients. We're seeing tapering of steroids. And we're seeing an improvement in fatigue. So when you see all those things moving in a trial, it's an accomplishment. And so we're really happy to have -- in collaboration with UCB, who's been a great long-standing partner for us with dapi, really happy to have 2 different products to bring to bear, hopefully, in lupus.

That's a great overview. Maybe to dive into each of the ongoing pivotal trials in a little bit more detail. So Biogen's recent earnings call had announced that the TOPAZ -1 and 2 trials in CLE have completed enrollment with data expected by the end of 2026. Could you briefly review the design of TOPAZ-1 and 2?

So TOPAZ-1 and 2 are SLE studies. So that's -- yes, no problem. Those are replicate studies in SLE of 540 patients each. So definitely excited to -- these are large trials to recruit. So we're -- and they're both global studies where we're looking at patients who have a systemic lupus. We sort of enroll patients who have a certain disease severity that we bring into the study. And we have -- in that trial, we're testing 2 different dosing paradigms, which is administered subcutaneously once a month. And we're just examining sort of our primary endpoint there is the SRI-4, which is a composite endpoint that -- and we're also measuring BICLA. So those are as another endpoint. Those are overall sort of markers of improving disease control in lupus. And so we'll be looking at that. And then we have other endpoints, as I mentioned, looking at controlling joints and impact on skin as well as, of course, we're going to look at the steroids as well as multiple other endpoints. So large replicate, global, well-powered studies to corroborate an impact on overall disease control with that primary endpoint.

What do you think are the key risks to the trials? If they were to fail, why would that be?

Yes. I think we're very -- we've been very intentional and very thoughtful about how we use the POC data to appropriately power about that we're testing 2 doses. So that is a good thing. I think to do that dose ranging so that we will cover hitting the target and then understanding if we hit the target, will that manipulate biology and going into a representative sort of sample. So I don't think we can do much more than that. But of course, as well as controlling the background, medications and then adjudicating the disease severity. So we're really -- I mentioned that I think historically, lupus, it's not just having a drug and then putting it into patients who really have lupus, it's all the clinical trial execution pieces. So it's a very high-touch hands-on approach to executing these trials. I can't know if we got it all right, but hopefully, we brought as much to bear as possible.

And any thoughts as to what data needs to be produced on the key endpoints in the studies to make litifilimab a part of the standard regimen? Is statistical significance enough? Or is there some specific quantitative level that you're hoping to achieve?

Yes. Of course, we power them to sort of hit the primary as well as look at, like I mentioned, secondary endpoints that are meaningful to patients and providers. So when we're looking at what patients want, first and foremost, to feel better. This is a disease that is very debilitating, right? You have joint pain. You have often a lot of systemic symptoms, which can include profound fatigue fevers, just sort of overall skin manifestations. Some of them have other sort of organ systems, which are flaring to certain degrees in their kidneys. Some have cognitive issues with brain fog. So it's a really multifaceted disease. And these composite endpoints allow us to see, hey, on all these different endpoints, for this patient, are we manipulating your disease in a way that for the features which matter to you are overall, are we manipulating. So I think, of course, we're going to look to see parity with -- there's only 2 approved drugs so far. We are looking to see how we're performing against those. But also, we know the ACR guidelines are pushing. We want people on less steroids. If you're diagnosed at 20 years old, you can't be living on steroids until you're 70, right? They have major toxicities. Most patients, even on biologics are not getting to lower limits of disease activity. So there's more that they could do for overall disease control. So those -- we're not getting good fatigue improvement. So those are all the features in this large replicate trials that we're going to be looking for. And in cutaneous, which is the skin predominant lupus, there, it's -- we're sort of looking for almost like you do in other dermatologic diseases, sort of percent reduction, right, in overall sort of amount of surface area, we'll call it, for lack of a better word. So there's endpoints like you see in psoriasis or atopic dermatitis, where you say, can I get 50% improvement? Can I get 70% improvement? And that's proven to be clinically meaningful to patients.

Got it. Actually, maybe could you go into a little bit more detail on the design of the AMETHYST trial? How many patients enrolled? When do you expect to release data?

Yes. So AMETHYST is -- we had the positive LILAC proof of concept, and now we're moving into this Phase II/III. And so the first cohort, which we enrolled was 90 patients. And now we're at the like high -- in the mid-300s up to 400. We're still sort of finalizing that and looking at that sample size for AMETHYST. So it will be a robust study, one of the biggest cutaneous lupus trials ever conducted which is great. We love that. And it will be in concert with having SLE data. I think we'll be able to look comprehensively and say, "Hey, we have these 2 nice SLE studies. We have this dedicated CLE study. Altogether, we really see how this is manipulating biology. So there -- we have thresholds for cutaneous amount of cutaneous disease, which is sort of in that moderate to severe level. So you have to have moderate to severe cutaneous disease to come in. And then we're looking at 70% improvement, 50% improvement. Those are the types of metrics that we'd like to see to say, hey, this biologic is helping you.

Got it. Has Biogen discussed its filing strategy in SLE and CLE. Would you file the 2 indications independently? Would you file at the same time and hope to get a broad label? I honestly can't recall if that's something that Biogen was saying?

I think so. Yes, I think that's something that we are definitely thinking about how to optimize. We know that we have a single Phase III in CLE. So I think they are -- as I mentioned, it is in concert, we'll be thinking about them together, but the exact way in which we're doing that, especially with the trials, timing and what the best strategy is, we're still working through and should have, I think, next year, some more thoughts about that. But we're super excited to have gotten the SLE 2 trials enrolled now. Hopefully, CLE will bring it around, finish enrolling that study. And then hopefully, we'll have a couple of different options and choices for how to approach it.

Maybe moving to dapi. You mentioned the PHOENYCS GO trial. For those less familiar, could you summarize the data from that positive Phase III?

Sure. So that trial was enrolled patients, over 300 patients with moderate to severe, what we call active sort of systemic lupus. And it was very carefully sort of crafted to really make sure that we would bring these right patients in that even despite standard of care and they were allowed to be on steady doses of standard of care, still had unmet need. And so we brought them into the study. We sort of had a fixed and we do it in [indiscernible] as well, steroid taper. So we say, okay, we're going to get our drug on board. And then after a certain number of weeks, you have to start tapering your steroids, so we can see if you're able to effectively do that. We also measured all the components I mentioned of overall disease control in every organ system using these composite endpoints. We measured fatigue. We also -- we measured overall disease activity scores. So we're really looking very carefully across those over 300 patients to see if adding the CD40 ligand to your -- to disease which was really not ideally controlled could actually bring you into control. And what you saw over time, as you look across that 52 weeks in that study, you saw that onset. You saw, hey, you overall see the impact on the BICLA, which is this composite score. We also hit on SRI-4, which is a different composite score. You saw the steroids coming down. You saw the reduction in flares. You saw the fatigue scores improving. And you see me, I keep moving my hands because they were -- I just was so happy when they came back because directionally they track. A lot of the curves look similar, right? Switch out the endpoint, but you see the same effect that -- and there was durability, right, because it's a relapsing and remitting disease. So these are people who are actively flaring. So you want to see, yes, even over a year, they might have bursted through, right? They might have relapsed despite therapy, but we showed they had actually a 50% reduction in flares if they were on our drug. So that was the top line.

How does the design of PHOENYCS FLY compared to PHOENYCS GO? Are there any notable differences?

No. It's very similar. I think that, of course, we look at the data and learn from it. But essentially, it's going to be looking at that BICLA. It's going to be powered effectively to do that. The one thing that we did mention, and it's in the public domain, one of the things you never know, particularly it's severe -- moderate to severe disease and as you're manipulating steroids up and down, how -- when will the treatment effect come on? So our first primary was the endpoint at week 24, and we just missed. So we're thinking about that. It's really overall disease control as opposed to. So that's something we're kind of thinking through. But honestly, it's -- they were designed to be replicate. So they're quite similar. Yes.

And has Biogen guided to when PHOENYCS FLY could read out?

I think we are -- I think [indiscernible] was 28.

And again, any thoughts there, what type of data needs to be produced to put dapi into the standard regimen for the treatment?

Yes. I mean we'd love to see that replicate that PHOENYCS GO data, not on the primary end. So it's a yes and answer for those other components, the flare reduction, the fatigue and the steroid sparing. Even as we're designing, you can see that the American College of Rheumatology keeps pushing us to try to get -- no, get them on 5. We used to be if they were down to 7.5 milligrams of prednisone, that's good enough. Now they're like 0.5. There's really this push because as a consequences of long-term steroids for these patients that they want them on as low a dose as possible. So we're going to be looking at all of those. Can we reduce flares, reduce fatigue, reduce steroids and hit the primary.

That is helpful. Maybe in the last couple of minutes, Biogen unveiled a new program recently, BIIB142, the IRAK4 degrader. Could you provide a brief introduction to that program? How can an IRAK4 degrader be differentiated? And for what autoimmune diseases could it be most promising?

Yes. So what intrigues us about that target is probably and that asset in particular, are 2 things. IRAK4, we know plays a key role in inflammation. And this is an oral molecule, and it's actually a slightly different modality in that it's a degrader. So it is complementary in that it's a different mechanism of action and a different presentation in an oral molecule. Where we could take it is that's sort of a fun thing when you're in immunology because you could take it into lots of different things. The first thing we need to do, of course, in the healthy volunteer study is just kind of get our bearings with the PK and the PD and then continue to look at the types of -- we could take it into multiple autoimmune conditions. So we're contemplating all manner of those. You could imagine, of course, we might think about how could this look potentially in a lupus portfolio, but we could also bring it into other places as well. So we haven't locked in the final, but hopefully, it's a multi-indication strategy if we can do it the right way. And we'll sort of update as we go of where we're going to put that.

As you said when the Phase I data could be released?

We haven't. Yes, we're just getting going.Yes.

We covered a lot of your I&I and kidney programs, but is there anything we haven't discussed that you'd like to highlight? Any other programs that we haven't brought up that you think are particularly promising?

I think we definitely continue to build out our early-stage pipeline. And hopefully, we have been fortunate enough to bring in even more immunology research expertise to Biogen. And so you saw us we did the Vanqua deal where we brought in that C5 asset. Hopefully, we'll continue to bring in potentially other particularly preclinical and assets into our portfolio so we can collaborate and do more of this work. Of course, also on the kidney side, that's definitely -- we have a follow-on anti-CD38 because feels is amazing, but there's other places, as you indicated, we could take it. And so whether we choose to do that with a frontrunner asset or with a next-gen type of follow-on anti-CD38 is also under consideration. So those are some thoughts here.

Great. With that, I think we're out of time. Thanks so much for joining us today. We really enjoyed the overview and the discussion.

My pleasure. Good to be here. Thank you.

Thanks.