Biogen Inc. (BIIB) Earnings Call Transcript & Summary

Thank you guys for being here. Super excited to have Biogen management join Alisha. Thank you for making time. I'll let you kick things off.

Thank you. Thank you for all of you that showed up today. I appreciate that you're here. Even if you have other work to do, I love that you're at least in the room, so I don't feel alone up here with one of my favorite people. So first and foremost, I'm supposed to say the company line that I will be making forward-looking statements today. So if you have any questions, please go to the Biogen website and look at the disclosures. I think first, what I'd like to start with, and I don't know how close everyone is with the story of Biogen, I know that you are. But sitting in the seat today versus 3 years ago is a very different seat for this company since our new CEO took over, Chris Viehbacher. And I think one of the first things that we did as a company, which was calling it a new Biogen, he really started to overhaul what we were doing as an organization, started with Fit for Growth. That was our cost-cutting measures, where we really came into the organization and said, you know what, we need to restructure how we're allocating costs. And this is now the year that we have finalized that to achieve our $1 billion in gross savings and $800 million in net savings. And I think when you look across the board, he's done really, along with the executive team, a fantastic job of optimizing and maximizing where we're going as an organization, especially our pipeline. And I think it becomes very important for pipeline because if you think of 7 years ago with Biogen, we were just an MS company, and we now have 4 different franchises. The ones that I think that you probably talk about most often are LEQEMBI for Alzheimer's disease. But when you look at today, for Biogen, we have 10 Phase III or Phase III-ready programs in place. And next year is the first year that we start turning over some of those cards, which will be very important to us. And so when you look at that and you look at what's reading out next year, we have BIIB080 for tau. I think there's a lot of interest for that. And then we also have litifilimab for lupus, 2 SLE readouts will happen along with Parkinson's phase, I believe, Phase I or II for a LRRK2 asset, which will also be interesting. But more importantly, we have several launches that are going to be coming along. And actually, when you look at where we were just a couple of years ago, someone earlier today asked me, Alisha, but what's the one big product when you look at 2030? And I said, if you look at a pie chart, we are going to have several big products, which will be the first time that I think Biogen will be in that seat. And so I think Chris has done an excellent job with capital allocation. And I think when you look at our launches, we've had some very good launches over the past couple of years.

Outstanding. Outstanding. I guess I'll start with the topic everyone is obsessed with right now, which is preclinical Alzheimer's opportunity.

I had a feeling you were going to go there.

I go there. Let me just start by asking you, we hosted the R&D leadership team recently from Biogen. One of the takeaways was they expressed openness that in a scenario where Lilly shows a certain signal in their study, Biogen could find ways to accelerate the readout on their end as well. I guess my question to you is, there's a lot of numbers being thrown around from a commercial perspective and what the size of the market is. How have you thought about what that market size could look like in pre-Alzheimer's?

So I think for presymptomatic, what a wonderful day if we are able to actually go to individuals who are still in their prime, in their life and say, if you would like to maybe prevent this from happening, there's a possibility to doing it. When you look at the market size for that, it's so tough to say because I think Alzheimer's in general right now, if you look at MCI mild or severe, the numbers are quite large. So if you look at pre-Alzheimer's and if you think that Alzheimer's is getting worse and not better, then you're going to look at multiples of that for presymptomatic. And I think different numbers are thrown out there because there are no codes. There are no ways of diagnosing presymptomatic Alzheimer's. And because of that, even if you talk to someone in commercial or a different company or a payer or an HCP, no one will have any idea until we understand what these trials look like. I think the other interesting thing is if the trial from Lilly comes out as positive, that is great, I think, also for Biogen and Eisai. But if it comes out as negative, it's not necessarily bad for Biogen or Eisai. And that is because the trials are truly completely different in the way in which we recruited the patients and what we're actually trying to answer. And so at the end of the day, I think there's a lot of runway. I mean, first of all, you see how long it's taking for the current patient population who have symptoms, who go into a doctor's office and say, I have a memory problem to try and get on product. Imagine it being -- I mean, I always say everyone in the room, obviously, has no cognitive decline. That is what presymptomatic is. It's people like you who are living totally normal than us saying you might want to go on to a drug. And so building an infrastructure for that and convincing patients to come into the office is a very different way of approaching the market.

Makes sense. Would you agree that at its peak, the current indication is half or less versus the pre-Alzheimer's opportunity? Like the pre-Alzheimer's is to 2x plus of the current indication theoretically?

Theoretically, I think that is the number that has been thrown out most often and has also been the number that has been validated by external sources. But when I say sources, again, it's a very loose number. I do find it to be a large opportunity. I think going wild with the number is probably not useful, but I do think being a couple of multiples is probably more of a reasonable.

Got it. And Alisha, does your thought process change based on what the effect size looks like? So for example, there's an expectation Lilly trial should track 40% to 50% effect size. Do you have to be in that ballpark to accomplish these numbers or not necessarily?

You know, we had spoken about this earlier. But even when our trials read out for LEQEMBI and even for Kesimpta, doctors still say, but what does that mean? What do these numbers mean? What does that look like in -- like clinically for a patient? A lot of -- these are just clinical trials. Doctors aren't close to it. So I think even like an effect size, it becomes -- you have to go to a doctor and say, this is the type of patient you're looking for. This is how you'll try and diagnose them. And then this is what we believe the benefits will be. Benefits, though, for physicians are very different depending on their experience. So even if you look at drugs today, it is not -- a doctor doesn't come back and say, wow, their CDR summer boxes are really looking good, Alisha. What they say to me is they remember their husband's name for the first time. We had a priest who went back and finally went back to a Sunday service and could do a Sunday service again. That is the language in which they use. So until the trials read out and we understand the meaning of the outcomes and meeting the endpoints, that's when you know how to actually.

Have you heard of anecdotes like that? Because my perception, at least looking at the data always was whatever you remember today, the further degradation will be slower. It's not like you will revert back to remembering more things.

So we have seen through a couple of our trials that some patients report improvements and there's also stabilization and there is also slower decline. But you do get feedback where patients can remember things again, they feel differently. They also report back. I told you the priest that we had one gentleman who was this -- he loved cooking. He lived in this house with this massive library and his kids were so sad because he stopped cooking. That's how they knew something was wrong as he didn't cook anymore. And he had been on product for, I believe, it was around the 6- to 8-month time period. And the son had called one of our doctors and said, "I knew something was working." He pulled out the most complicated recipe in his library, and he made a meal for us that night. So that's the feedback that you hear from individuals that matter.

Fascinating. I guess from your perspective and from the commercial organization perspective, is it a much heavier lift to convince people that, "Hey, I know you're 50 and healthy and no Alzheimer's, but you should really be on this because you might develop it." Like wouldn't theoretically that be a far more difficult heavy lift? Or you're just going to show them their blood-based biomarkers.

Well, that's what I'd ask all of you. I mean I know that for someone like me, if they told me I had to go on a statin, and I'd be like, really, are we sure about that? I'm in the industry, right? So I think that all of us have a natural thing of like, I don't know if I need that yet. Going to a 50-year-old or even in our trial, we have 55-year-olds and saying, "Hey, you need to go on this," it has to be pretty convincing. I think that we've all become much more difficult in being able to be convinced with everything that's out there. And I think we're all -- especially all of you, you're so smart. In this room, I think you can probably negotiate your way out of anything when it comes to medicine because you know much more in the average person, but you do have to be quite convincing, I think, to get people on.

Okay. Got it. Excellent. Fantastic. I guess maybe at that point, we should probably transition then into just understanding the commercial dynamics on LEQEMBI itself right now. I think there was an element of -- folks looked at this very, very closely, and I don't think they've looked at it as closely in a while. So maybe for the benefit of everyone, could you remind everyone what's the price of LEQEMBI for induction? What's the price in maintenance? And then what's the price for subcu?

Yes. So when you look at the WAC price for IV induction and you go to maintenance, that will be 50% off of the WAC of IV induction, okay?

So IV maintenance is half of induction?

Yes. IV maintenance, half of induction because you're only going in for 1 IV a month versus 2. Now we just launched a new formulation, which is called IQLIK, and IQLIK is the subcu administration for LEQEMBI, which clearly offers flexibility and optionality for patients who don't want to go in to get their IV. If you go from IV induction to subcu maintenance, it's a 30% reduction in price or revenue.

Got it. So I guess I'll tell you the direction I was going with this. When I think about your induction pricing, $23,000, maintenance, if it's once a month, it's half that, 13,000. But the subcu is more like around the $18,000 price point. Just sticking with that logic chain, when you get the induction approved on a subcu basis, theoretically, it sounds to me like there might be a bit of a price step-up in the works implicitly just the way the subcu could get priced. Is that an unreasonable way of thinking about it?

I like the way that you think, Umer, I always have. And I will say that if you were to look at market research for sort of economics around this, I think that research would show that a higher price point could be sustainable because you're no longer having a patient come in for the cost around the infusion and the administration and the staff that take place. So I think we have not been public yet with our price. We're still working through that because Eisai is the final decision maker when it comes to price. But I think that it would not be unreasonable if we thought it could be higher because we believe that, that is what market research shows.

Got it. And for induction subcu, will that be a single shot or 2 shots?

Two shots.

Two shots per week.

Per week.