Biogen Inc. (BIIB) 2026 Q2 法說會逐字稿

Good morning. My name is Jess and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen second-quarter 2026 earnings call and business update. (Operator Instructions)Today's conference is being recorded.

Thank you. I would now like to turn the conference over to Mr. Tim Power, Head of Investor Relations. Mr. Power, you may begin your conference.

Thanks, Jess, and good morning, everyone. Welcome to Biogen's second-quarter 2026 earnings call. During this call, we'll make forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review.

Our earnings release and other documents related to our results, as well as reconciliations between GAAP and non-GAAP results discussed on this call can be found in the Investors section of biogen.com. We've also posted slides to our website that will be used during the call.

On today's call, I'm joined by our President and Chief Executive Officer, Chris Viehbacher; Dr. Priya Singhal, Head of Development; and Robin Kramer, our Chief Financial Officer. Alicia Alaimo, President of North America, will also be available for the Q&A section of the call.

We'll make some opening comments and we'll move to Q&A. And to allow us to get through as many questions as possible, we kindly ask that you limit yourself to just one question.

And I'll now turn the call over to Chris.

(technical difficulty) with the goal of achieving sustainable revenue growth. So if I take the three elements that I think contribute to that is, first is our growth product portfolio. Now, even before we include the products from Apellis, we've seen significant growth, and in fact, our growth portfolio now is greater than our Legacy MS Portfolio.

And that's really been most recently enhanced by two important achievements. The first is SPINRAZA High Dose, where we've seen across all markets. The first market to be approved was in Japan, then Europe, and now the US, and we're starting to see this roll out in the more international markets.

In all of those markets, this conversion has gone much faster than we expected. And that's an important development for us because this is an extremely competitive market where efficacy matters and we've seen considerable efficacy benefits come from the high dose of SPINRAZA.

And this is a franchise that we see for the longer-term because we've got Salanersen coming along behind that. So maintaining market share, and in fact, what we're seeing is some anecdotal switchbacks, particularly from the oral product to SPINRAZA. It's been important not only for the quarter but important for the franchise longer-term.

The second major achievement this quarter was really LEQEMBI IQLIK. It's the first of its kind Alzheimer's treatment, so now offering home dosing for both initiation and maintenance. I think there's probably two opportunities in particular here, maybe even three.

The first is obviously with the biweekly infusion, a number of physicians are thinking carefully about which patients are actually going to be eligible for treatment. If they don't think that the patient can get there on their own or there's not a caregiver who's prepared to take the time to get that patient to the infusion centers, those patients are often not offered treatment.

So this should perhaps make it easier for a broader section of patients to become eligible for treatment. We think also that there could be a benefit in maintaining patients longer on therapy. And then finally, we think there's a competitive advantage because the benefit that the competitor has with one monthly dosing now seems to be much less when you've got a home subcutaneous option for them.

The second element of the sustainable growth is our pipeline, and we'll come on and talk about that in a few minutes. But then the third element is really SYFOVRE and EMPAVELI from the acquisition of Apellis. You've seen strong double-digit growth for both the full quarter and year-to-date for the combined sales of those two products. Now, we're only consolidating the revenue from the May 14 when we close the transaction.

But those products are already contributing significantly to our own growth. And I'll take the opportunity here just to note that if I think about all of the integrations that I've certainly seen over my career, one of the most important metrics is really how revenue does through this period of turbulence really in organizations.

There's an awful lot of uncertainty that comes from these major transactions. And the ability to maintain continuity of revenue is, I think, the number one measure of the success of an integration. And I think so far that we have seen that, and that's really because this is mostly a US transaction.

This is really a credit to Alisha's leadership and her team in really reaching out and making sure that the Apellis team feels great about joining Biogen. And certainly, when I talk to the former Apellis, now Biogen employees, one senses a sense of energy and passion and commitment. So we're very much encouraged by the importance of this acquisition.

So the next slide is really again, and Priya is going to talk a lot more about this, but we've got a growing base. And now, we've got five registrational Phase 3 clinical trial results coming along, obviously two in SLE for lupus, one in CLE for lupus, one for AMR, and one which is really from our partner at Stoke in Dravet syndrome. So those are now within the next four quarters. So these are imminent and could really make a difference to the long-term growth outlook of Biogen.

As we talked about before, we're also rebuilding our early-stage pipeline. We went three years really without filing an IND. We made some really pretty dramatic moves to overhaul our research organization, how we do research. And the encouraging thing is that I think, we are now in a much better place already in our early-stage pipeline. Some of that is coming early. We've had three INDs already this year. We've got more to come.

We've done a number of key collaborations like Vanqua and Deyra last year, the acquisition of RayThera this year, also substantially boosts our early-stage pipeline. This is really investing today for really what the products launching in the mid-2030s, but you've got to start today if you want to have that growth tomorrow.

And then if I look at this slide, this is a slide we first showed at JPMorgan earlier this year. At that time, he said, look, there are a number of near-term current growth drivers, and we see them with LEQEMBI and ZURZUVAE, VUMERITY, SPINRAZA, SKYCLARYS, and QALSODY. And that is the group of products that now exceed our Legacy MS Portfolio and grew strongly in the quarter.

Now, when you add SYFOVRE and EMPAVELI, these products already in themselves are enough to help Biogen get back to a growth story. And then when you look at what's coming, we just talked about these imminent data readouts. That's the second wave here, the registrational late-stage pipeline. These are all products with significant opportunity.

Now, this is also a major shift for Biogen. Three and a half years ago when I came, we really only were visiting the neurologist. We had a few products that we could still promote in MS and we had SPINRAZA. We are now looking at visiting rheumatologists, dermatologists, nephrologists outside the US and epileptologists and nephrology transplants.

So there's been a significant growth in the breadth of our portfolio. That's exciting, but it also means that really now we are shifting to not just growing the substrate of growth but now executing on that growth story. So there's a lot going on inside the company to make sure that all of those launches are a success.

But we're also keeping an eye on the longer-term, and that's that third wave, the opportunities for longer-term growth. Diranersen, you've seen the data on that, very promising new modality in Alzheimer's, not necessarily part of the equity story near term, but longer-term, this could significantly contribute to Biogen's growth. This is where this renewed early-stage pipeline that I just talked about is so important in the research portfolio.

From a BD M&A point of view, I think we have what we need to grow near term. I think we'll be less intentional about M&A and perhaps more opportunistic. But we'll be certainly intentional about the earlier stage development. Ideally, we'd like to be bringing in assets between development candidate and IMD stage.

And so, when you look at what is the opportunity, and these are not revenue forecasts but really an initial sense of what's the addressable market that come from the pipeline, and I would say we're still doing work. We've got lupus here as a potential $8 billion market.

The MS market is over $20 billion. And I think we're not there yet in terms of being able to really say how we access that. It's probably a $2 billion to $3 billion market today, but there's no real reason why this market shouldn't be the size of MS. But even if you just say the $8 billion, that's a significant opportunity for us to go after. Obviously, not only with SLE, but we would hope to be the first product to be approved for CLE.

Then you got AMR, approximately 11,000 patients just in the US alone, Phase 3 data coming in early 2027. That's at least a $2 billion addressable market here, it depends on which pricing you're using. But when you see the pricing that is now occurring in IgAN, that is going to have a spillover effect on AMR. And then when you think about microvascular inflammation, which is another indication we're pursuing. That market could also grow.

And of course, then later on we've got IgAN and PMN data coming for Felzartamab. And then Davet syndrome, as you know, we have the ex-US rights. But even in ex-US markets, there are about 7,000 patients in Europe alone. And when you add up all of our key Biogen territories, that's at least a $2 billion opportunity.

Again, we're busy working on that. We're still, in some ways 18 to 24 months from launch on those things and continuing to work, but this shows the potential. It also shows why we have to execute with excellence and we're busy investing today to make sure those launches are a success.

And so, we'll go to the last slide. If you looked at Biogen pre the Apellis announcement, consensus of investors was that Biogen was going to be roughly flat through 2030. I think we're already seeing that consensus start to shift because people start to appreciate the Apellis transaction.

But the way we certainly see it is when you take the Apellis marketed products and you add them to our own growth product portfolio, I think we're seeing a growing picture, and when you now then take the late-stage registration pipeline.

Now, I can remember vividly one investor in a meeting that we had just after we had announced Apellis, saying, I get it, the late-stage pipeline now comes on top of a growing basis instead of a stable basis. And I think this slide neatly encapsulates really the strategy to return to sustainable revenue growth.

And with that, I'm turning to Priya, who can talk a little bit more about that late-stage registration pipeline.

Thank you, Chris, and good morning, everyone. As we deliver the new Biogen, a large part of our transformation and near-term opportunity for growth comes from our late-stage pipeline, as Chris mentioned, and I am excited about this future. That is because today, we have one of the strongest and most diversified late-stage pipelines in Biogen's history with multiple near-term opportunities to create value in the upcoming years.

We shared this slide with you at the beginning of the year, and today you can see that we are delivering on the opportunities we outlined, including the FDA approval of IQLIK initiation, which is an important innovation for patients and caregivers. Beyond IQLIK, Biogen and Eisai presented new data at AAIC earlier this month. This included real-world evidence supporting the long-term benefits of continuous LEQEMBI treatment.

We also shared new data for Diranersen, establishing proof of concept in Alzheimer's disease, and we are now focused on developing the next steps for the program. And more broadly, we continue to demonstrate medical leadership across our portfolio with important new data presentations for both Felzartamab and Zorevunersen.

While these milestones reinforce the potential of our portfolio today, what makes this period particularly exciting is what lies ahead in the near term. We are now entering a multi-year registrational cycle beginning with SLE data by the end of this year, and followed by multiple catalysts extending through the remainder of the decade.

And while we remain focused on advancing our high-conviction late-stage opportunities, in parallel, we continue to invest in the next wave of innovation. The progress we have made this quarter has meaningfully accelerated the transformation of our pre-proof-of-concept pipeline.

At this point in the year, we are also now beyond our high-risk, high-reward readouts, as we mentioned at the outset. This includes our Phase 2 BTK inhibitor, BIIB091, where we achieved proof of concept in relapsing remitting MS. And in line with our disciplined approach in how we advance assets, we are evaluating next steps given the increasingly competitive nature of that market.

As we rebuild our early-stage pipeline, we expect to add six new programs this year, including new Phase 2 proof-of-concept studies to broaden the potential of Felzartamab and EMPAVELI in autoimmune disease, as well as first-in-human studies from our internal pipeline and the lead asset from the pending RayThera acquisition, which is now already in Phase 1.

Overall, we believe these investments are building a durable innovation engine with the promise of delivering sustainable long-term growth and value creation. So as we step back and look across the next several quarters, we expect readouts from five registrational studies across four important indications: SLE, CLE, AMR, and Dravet syndrome.

And reflecting the strong execution of our teams and enrollment momentum, we have also accelerated the expected Phase 3 readouts for Felzartamab in AMR and lidifilimab in CLE with data now expected in the first half of 2027.

Later this fall. We also look forward to presenting new 52-week data from the Phase 2 portion of the ongoing AMETHYST study at the EADV Annual Conference, which we believe will provide important insights into the durability of response for Litifilimab in CLE.

Taken together, these milestones are expected to generate important data over the next several months that has the potential to shape our next phase of growth.

In summary, the strategic decisions and investments we have made over the past three to four years have positioned us to deliver near-term readouts while advancing long-term innovation, and we look forward to continuing to share our progress with you.

With that, I would now like to turn the call over to Robin, who will provide a financial update for the quarter.

Thank you, Priya. Good morning, everyone. I'm pleased to be speaking with all of you today following a strong revenue performance in the second quarter. Total second-quarter Core Pharmaceutical revenue was $1.8 billion, up 4% year over year and 12% quarter over quarter. This performance was driven by our growth portfolio, which generated over $1 billion of revenue in the quarter, up 24% year over year and 25% quarter over quarter.

The Biogen standalone growth products, excluding our Apellis, Syfovre and Empaveli revenue was $933 million, up 9% year over year and 10% quarter over quarter, and as Chris noted, generating revenue in excess of our Legacy MS Portfolio again this quarter.

Our growth portfolio has been further strengthened with the addition of Syfovre and Empaveli from the Apellis transaction, which generated $128 million in combined revenue for the period post the May 14 acquisition date.

This quarter's results demonstrate strong commercial execution and the significant progress we've made in our portfolio transition. Let me now take you through some key highlights from our core pharmaceutical product performance in the second quarter.

For the growth portfolio, SPINRAZA revenue was $402 million, up 2% year over year and 7% quarter over quarter. This was driven by both demand and stocking for the high-dose regimen in the US, partially offset by shipment timing in certain ex-US markets.

High Dose SPINRAZA was approved in the US in March, the EU in January, and Japan last year. During the period of patient transition to the high dose regimen, we benefit from revenue associated with the one-time transition dose. SPINRAZA high-dose maintenance is priced at parity with SPINRAZA.

We are pleased that the pace of conversion to high dose has been going well, and enthusiasm from the patient and prescriber communities for a higher efficacy option has been strong. We also believe this is encouraging for the opportunity for our registrational pipeline asset, Salanersen, which has recently received breakthrough therapy designation.

VUMERITY revenue of $197 million was down 7% year over year, partly driven by inventory dynamics and up 10% quarter over quarter. Revenue for the first half of 2026 was up 7% versus the comparable period in the prior year.

LEQIMBI in-market revenue was $184 million, up 15% year over year and 9% quarter over quarter. We saw a continuation of market growth in key markets, including the US, Japan, and China. And as Priya mentioned, we are pleased to have received FDA approval for IQLIK initiation earlier this month.

SKYCLARYS saw patient demand growth both in the US and ex-US in the second quarter with revenue of $168 million, representing 29% growth year-over-year and 11% quarter-over-quarter. SKYCLARYS is now available in 36 countries, and we continue to expect SKYCLARYS growth to come largely from ex-US as we advance the launch.

ZURZUVAE continued to show strong underlying demand growth with revenue of $71 million, and we're also pleased to announce that ZURZUVAE is now launched in Germany.

For the MS Portfolio, I would like to highlight that Tysabri continued to demonstrate resilience and demand in the midst of a biosimilar launch in the US And Europe. Second-quarter revenue of $451 million was down 1% year over year and up 2% quarter over quarter. We've invested for a long time to establish Tysabri as an important option for MS patients, and we're pleased to see this reflected in the resilience of Tysabri thus far.

Turning now to an update on the Apellis acquisition, which closed mid-quarter on May 14. The integration is progressing well, and both SYFOVRE and EMPAVELI had strong performance in the quarter.

SYFOVRE continued to demonstrate market leadership with total revenue in the quarter of $162 million, up 8% year over year and quarter over quarter, with total commercial injections up 13% year over year.

EMPAVELI continues to launch in C3G and primary IC-MPGN with total revenue of $46 million, up 123% year over year and 12% quarter over quarter.

The Apellis acquisition accelerates our return to growth. It adds two best-in-class commercialized medicines to our growth portfolio, which we expect to contribute materially to our top-line growth in the near and long-term.

We expect SYFOVRE and EMPAVELI on a combined basis to grow in the mid to high teens through at least 2028. In addition, we expect this transaction to materially increase our non-GAAP diluted EPS CAGR through the end of this decade.

We expect approximately $120 million to $130 million of impact to our other income expense line in both 2026 and 2027 associated with interest expense and foregone interest income associated with financing the transaction. We expect to generate at least $250 million of run rate synergies by the end of 2027, largely from optimization of general and administrative expenses and research and development.

For 2026, we expect approximately $0.85 of non-GAAP EPS dilution, primarily from financing costs associated with the transaction. We expect the transaction to be accretive to non-GAAP diluted EPS in 2027. We believe this transaction represents an attractive use of capital that will further bolster both our top-line and bottom-line growth prospects in therapeutic areas aligned to our immunology and rare disease strategy.

Moving on to the financial highlights, total revenue for the quarter was $2.7 billion, up 3% year over year.

Revenue from the Anti-CD20 royalties and profit share included in other revenue was $514 million, up 10% year over year. This increase was driven by royalties from Ocrevus, which benefited from the recent subcutaneous launch and resilience from Rituxan in the US.

In addition to the revenue contribution in the quarter from SYFOVRE and EMPAVELI as previously discussed, our results of operations for the second quarter of 2026 include a half a quarter of operating expenses and financing costs associated with the acquisition of Apellis.

Non-GAAP cost of sales as a percentage of revenue was 22% in Q2 2026 versus 21% last year. The increase was primarily due to product mix, largely from increased contract manufacturing revenue.

GAAP cost of sales as a percentage of revenue was also impacted by higher amortization costs associated with the acquired inventory, fair value step-up adjustment for SKYCLARYS from the Reata transaction and SYFOVRE and EMPAVELI from the Apellis transaction.

Non-GAAP core OpEx or combined R&D and SG&A expense increased 20% year over year. This reflects approximately $95 million of Apellis operating expenses from the May 14 acquisition date through the end of the quarter.

For R&D, it also reflects our investments in our Phase 3 clinical programs, including Felzartamab's indication in MBI and Salanersen, which were advanced as registrational studies in the second half of 2025, and Litifilimab, where we expect the Phase 3 SLE data later this year, including a $25 million year-over-year decrease in R&D funding from the Royalty Pharma funding for Litifilimab.

For sales and marketing, it reflects support of our US and international product launches and investments in pre-launch activities for our late-stage high-convection pipeline. As we previously announced, we recorded $164 million of acquired IPR&D and milestone charges associated with our investments in the development pipeline in the second quarter of 2026, including a $100 million upfront to TJ Bio associated with the acquisition of the Felzartamab rights in China, giving us worldwide rights to Felzartamab.

A milestone payment of $45 million to Ionis in connection with the initiation of the Phase 3 trial for Salinersen and SMA, and an upfront payment of $15 million to Ionis to opt in to BIIB147 in broad ALS.

Now turning to cash flow and the balance sheet. We continue to generate strong cash flow with $408 million of free cash flow generated in the second quarter. We exited the quarter with $1.3 billion of cash and $6.8 billion of net debt.

We closed the Apellis transaction in the second quarter, which was funded with $3.6 billion of cash from the balance sheet and $2 billion of term loan.

During Q2, we repaid $200 million of the term loan and continue to expect to repay the remainder of the term loan by the end of 2027.

Turning now to guidance. Based on the expected revenue performance of our base business, including our growth products and Tysabri, our guidance update reflects a $0.60 increase in the underlying business guidance as compared to our previous guidance.

We are pleased to be increasing our total revenue guidance from a mid-single-digit percentage decrease to a mid-single-digit percentage increase. This reflects both the expected performance of our growth products into Sabri, as well as the addition of SYFOVRE and EMPAVELI into our product portfolio.

Our guidance also reflects updates to core operating expenses, other income and expense, and our full-year tax rate, primarily to incorporate the impact of the acquisition of Apellis. We expect our core operating expenses in the second half of 2026 to be between $2.65 billion and $2.7 billion.

Our guidance also reflects updates associated with our strategic investments in the early and late-stage pipeline, as well as those associated with our near and mid-term growth. It incorporates transactions that have been executed and our current expectations of those that will occur for the remainder of the year.

It incorporates approximately a $3 non-GAAP diluted EPS impact of charges associated with IPR&D and milestones, including the Q2 TJ Bio transaction, the Ionis milestone associated with achieving the first patient dose in STELLAR-1, our pivotal Phase 3 cell nursing study in SMA, and the pending RayThera transaction associated with the addition of a Phase 1 immunology asset into the early-stage pipeline, which is expected to close in Q3.

And the expected full year 2026 $0.85 dilution associated with the Apellis transaction, again, largely driven by the impact of financing costs. Our updated 2026 full-year non-GAAP diluted EPS range is now between $12 and $13.

Please be sure to review this slide as well as slide 25 in the appendix of this presentation and our press release for other important full-year 2026 guidance assumptions.

In closing, strong commercial execution in the Biogen-based business and the addition of SYFOVRE and EMPAVELI resulted in strong top-line performance in Q2. And the completion of the Apellis acquisition accelerates our near and mid-term top-line and bottom-line growth potential.

With that, I would like to pass the call back to Tim to open us up for questions.

Thanks, Robin. Jess, could we go to our first question, please?

(Operator Instructions)

Chris Schott, JPMorgan.

Just a quick question for me on HD SPINRAZA, just a little bit elaborate a little bit more on how the ramp is coming here compared to internal expectation. And just any metrics you can share on the conversion you're seeing in some of the markets where the product has been launched for longer.

Maybe also as part of that answer, can you talk about how meaningful is the impact from patients switching back to HD to overall volumes to the product as well? I'm just trying to get just a general sense of just how this is progressing and impacting the franchise. Thank you.

Hi, Chris. This is Alisha. I'll take that question. So if you really think about SPINRAZA, it's almost a decade after introducing the first SMA treatment. What I think you're seeing is SPINRAZA still setting the bar on efficacy in the space. And also, if you think about how did SPINRAZA HD even come about, this was from several years ago.

We had many patients come forward to Biogen saying, we just wish we had more, we wish we had more. We feel like we could take an even higher dose, and then obviously, Biogen went in and developed this new formulation, and here we have High Dose today.

So now that we've launched, we are seeing basically the demand and the urgency really being driven by this patient community. In fact, if you think about metrics, SPINRAZA high dose is exceeding the original launch of SPINRAZA in both start forms and grads in the first 13 weeks of launch, and we are growing every single week.

So when you look at the Q2 revenue, sites are ordering high dose to prepare for each patient's next dose. And when you think about the dosing of the product, you do have to wait a quarter or two, depending on when you had your last dose of SPINRAZA.

The feedback from patients so far that have received the product has been quite positive. Also from the physicians, quite positive. So the teams are really supporting the payer approvals and the account P&T reviews and patient transitions.

Now, in this initial bolus of launch demand, you are seeing that the majority of the patients are transitioning from spin 12 mgs to high dose. However, we also have several patients who are either new to SPINRAZA and particularly babies. We hadn't dosed a baby in years. And so, we are seeing babies now getting dosed.

And also, we have had several switchbacks from at Evrysdi. So we think for this year, what you're going to see is the bolus of the transitions along into the beginning of next year. But our big focus for 2027 is going to be on new starts and on switchbacks.

One of the advantages that you have that we didn't realize was going to be such a positive in the market is with the spin 12 mg, there are four loading doses. With high dose, there's only two. And we do have patients who are more willing to do the two as the loading dose than the four, and that is where you're seeing also some of the switchbacks and new patient starts.

Yes, and just the US is actually one of the last countries to launch, actually unusually. So Japan, where we launched earlier as in Europe, that's where actually we're seeing, particularly Germany, seeing a reversal of the trend of switching to oral therapy and some trending back.

I think it's still early days, and as Alisha said, it's largely first, people moving from the lower dose to the High Dose. But again, as Alisha said, in all markets, and I go talk to physicians around the world when I'm visiting our affiliates. At the end of the day, it's really in these devastating diseases efficacy that really matters, and there is an enhanced opportunity here for that.

Thanks, Chris. Let's go to the next question, please.

Uma Ruffet, Evercore.

I guess I want to touch up on expectations ahead of your lupus readouts this fall. And specifically, we've seen Benlysta track at of mid-teens separation on SRI. We've seen Saphnelo from AstraZeneca track at something in the 20s. I guess, based on all the work you guys have done, what separation versus placebo would constitute something that's considered very clinically meaningful and differentiated over what's out there in the marketplace right now?

And Priya, could you also just remind us what dose of your BTK inhibitor is going forward? I'm just going to think about the liver implications, but I would love to know what the dose is. Thank you.

This is Priya. I'll take that. So I think just stepping back, we're really excited about our Topaz trials. This is TOPAZ-1 and 2. We will have results from both of these in Q4 this year. These are our SLE trials. So maybe just stepping back, I'll just comment on the fact that we've taken all the learnings from the prior trials to really ensure that we set these trials up appropriately.

And by that, I mean we focused on the high placebo responses that we've seen in past trials. Our trials have had rules to limit standard of care utilization. By that, I mean NSAIDs, corticosteroid tapers, handling data for responders and non-responders. But we've also stepped up to really think about the fact that this is a heterogeneous disease.

So how do we control for patient and participant heterogeneity? And we have tried to model our inclusion/exclusion criteria to be really quite track very closely to Phase 2 LILAC proof-of-concept.

Now, with regards to what we expect, I think we remain confident in our trial design, site selection, patient selection, really to get a very robust response. We'll see how we perform in the trial, and we'll wait for the results. I won't speculate.

Our primary endpoint is SRI-4. However, we have a key secondary endpoint in Bixler, and we have multiple patient-reported outcomes. So we'll really be looking at the totality of the data, including interferon signature and all of that.

I'll also remind us that from an MOA perspective, we think that Litifilimab is truly differentiated. Yes, it affects the interferon pathway, but it also affects chemokines and cytokines, and we think this is what's going to provide really the overall benefit.

And then, of course, CLE, we expect data next year and we'll be presenting 52-week data at EADV this fall, so we remain confident in that data set as well.

Now, moving to your second question on the BTK inhibitor, we haven't actually disclosed doses, so I won't be sharing much more information. Looking at what the next steps might be for this.

Do you want to add anything, Alisha, in the market research? Because I think this is one of those ones where it's no one thing that's going to be a marker of success. You've got steroid sparing. One of the things that we consistently hear from patients is fatigue, and yet you can't really build fatigue into an endpoint in the clinical trials as easily. So real-world evidence will play a role, but maybe you can say a few words on what it's going to take commercially to succeed.

First of all, we have now recruited several senior leaders with lupus experience, an entire medical team with lupus experience, and several marketers with lupus experience. And I have to say we've probably gotten more insights from them than the actual market research that you can get through third parties.

And I have to say that we talk about things like SRI-4 and endpoints. But when you really look at a physician and a patient and interactions they have, what we're finding in this market is there is a huge disconnect on what they expect from treatment.

Doctors want to run a patient's experience just by what they see in labs, and patients will come in and say, the three things that are really bothering me are fatigue, brain fog, and joint pain. And I do believe in this market, when you look at CLE, where there's only less than 5%. Of CLE patients receiving advanced therapy.

And I also, because there is no approved therapy, think the CLE patient numbers are under called. I know that we've reported out 75,000. I think that that is a much lower number than is actually out there. Secondarily, you're seeing that patients are getting lost in the system, being transferred from derm to room and room to derm where no one really knows how to treat them.

And then with the treatments that are on market as of today, there are downfalls. One does not work very quickly or very well, and another has an infection safety issue. And so when you speak to these physicians, they are really looking for treatment that can work much more quickly and can work in both CLE and SLE.

So I think that there's a very long runway for this therapeutic area. And because there is such a huge unmet need and these patients are known, we can track them in the system because most of them are diagnosed. We know which physicians they've been diagnosed by and who they see. I think that even though there is a lot of work to do, I find this to be a very good therapeutic area to enter.

Go to the next question, please, Jess.

Mark Goodwin, Leerink Partners.

Can you give us a little more insight on SYFOVRE, and just what is happening behind the scenes like, new patient starts or just the durability of patients and we understand that the injections were up 13%. But just trying to understand like what's going on there and what kind of growth we should be expecting from here. Thanks.

There is a lot going on with SYFO since we've been able to integrate them into the organization. First, I want to say I'm very much impressed and very grateful for the level of talent and expertise that joined from the SYFOVRE team.

I think the first thing that we have noticed with both SYFOVRE and EMPAVELI is when they came on board the company, both used very similar launch plans. And I think the one thing that we've really learned over the last seven years with our seven launches is that we really tailor make our launch plans. We really build them from the ground up. We launch very much informed and it's not templated.

And so, what we've been able to do is work with the SYFOVRE team on across the board, understanding what's really driving sales, where can we maybe reallocate capital, and how do we get the Biogen machine to sort of help drive some of their momentum.

And so, I'm very encouraged by the strongest quarter since really launched for SYFOVRE. And in the month of June, the month of June was the best month in the brand's history. And so what we're really seeing is the quality of growth across a number of areas.

I think number one, you're seeing our free drug has been lowered by half. We did end up looking at free drug programs and looking at where we put some guardrails in place to make sure really only the patients that need access to free drug do get it. And that has dropped by half. That's been part of momentum.

Secondly, if you look at where this brand started on sentiment across HCPs for slowing the progression of GA and where physicians are today, this SYFO routine has done a truly tremendous job on changing that sentiment. And because sentiment has improved so much, that is where you're seeing new writers coming on board. It's also where you're seeing many more patients coming on board.

So they grew both in patient members and in physicians who are prescribing. And I think that one of the tailwinds on that was the long-term five-year data that they've been presenting, which is really a lot of education around the progression of GA.

And specifically, when you look ahead, the market is only 50% of the retina specialists are treating, and only 20% of these patients are diagnosed. And so, the team is really looking at a couple of things.

One is the direct-to-consumer. We have decided to shut down a few programs. We're reallocating to a new commercial. I think maybe the SYFOVRE team and leadership thought their DTC came out a little too soon. Now that we think that the market is ready, we do plan on launching a DTC campaign that we believe will be very effective.

Secondly, pre-filled syringe. We do look forward to that launch as well. Pre-filled syringe is going to really support the workflow for physicians. We believe it will make it much faster for them, much more efficient, and they probably will be able to get more injections into the eyes with saving them approximately 15 minutes with these injections. So that's also great.

But more importantly, on a previous call, I think I had mentioned to you when we were looking at SYFOVRE, one of the things we had seen in our diligence is that there really was a big discon. A lot of patients discon after a year.

Well, now that the team is on board and we've really looked at the data, we've noticed that actually the discons happen after the first injection. That's where the big bolus comes from, even though it really only shows up in the numbers after a year where you see the 50% drop-off.

And we now believe, ue to all of the brands that we've had where we've had discon issues after either the first injection or first IV infusion, we know exactly what to do for that. So we are also rallying the team around how we support educating those patients and physicians on why they do not need to discon after the first injection, what kind of education needs to happen in the doctor's office.

So right now, we believe the HCP growth is trending in the right direction. We believe we will keep up that momentum. And then our focus is going to turn to educating the patients and activating them with DTC.

Thanks, Alicia. Let's go to the next question, please.

Salveen Richter, Goldman Sachs.

Thank you. Good morning. Just circling back on your BTK inhibitor, BIB091, could you just speak to how you expect this asset to be differentiated versus the later stage assets under development and how you're thinking about the safety profile given what's been seen?

Thank you, Salvin, this is Priya. So just stepping back, we took BIB091, which is a peripheral BTK inhibitor, non-covalent into a Phase 2 trial in RRMS a few years ago. And now, we've concluded the trial and what we see is that it could have compelling efficacy in RRMS.

But actually, as I mentioned in my remarks, we are looking at what is the appropriate next step, because we see RRMS as a very crowded competitive market, but we're also looking at the external inflections that we've seen in the BTK landscape. So we will communicate more about how we see this asset progressing further.

And we haven't actually made a decision to specifically advance it into an indication. So we're not there yet. We're still evaluating the data.

Overall, we see that it could perform really well in our RRMS, but I think it's another very important example of how we prioritize assets in our portfolio where we look at the scientific data, but we marry it up with the value and the opportunity in terms of totality and really capital allocation.

So this is an example of where we're taking a pause, we're looking at the data, and we will assess how and when and if we would advance it beyond where it is today. I hope that helps.

Thanks, Priya. Let's go to the next question, please, Jess.

Michael Yee, UBS.

Our question actually is going back to Litifilimab in CLE. Do you believe that CLE is a higher probability given perhaps less heterogeneity of the patient population? You've already talked about some of the risks in SLE and heterogeneity and placebo rates. So could you just comment about your view of CLE versus SLE and perhaps some of the data you might be getting at EADV that could help drive more confidence in that. Because I think there's some additional data presentation coming up. Thanks.

Thank you. I think stepping back, I actually don't see a difference in terms of probability of success between SLE and CLE. I remain confident in really the data that we saw from our LILAC Phase 2 trial, which we believe was a compelling proof of concept trial. And it was important because we tested the SLE population.

However, it was enriched for where we believe Litifilimab will have the strongest actions based on its mechanism of action. So we have focused our SLE trial to be quite specific to patients who have skin and joint involvement. And that is why I think I remain confident in how we've set this trial up and probability of success.

Similarly, with CLE, I also remain confident because of the focus on the skin and the data that we've generated so far. It just happens to be the situation that for SLE, given the broad indication and it's a very unfortunately prevalent disease. We have two Phase 3 trials.

And then with CLE, we have a Phase 2, Phase 3 trial, and that was a seamless trial, the AMETHYST trial. So you may remember that we actually have the opportunity to share Phase 2 data. It is not because we are more or less confident that we are sharing it. We have the opportunity to look at the Phase 2 data by itself without disrupting the Phase 3 portion, and we are just simply taking that data forward and bringing it to EADV.

We've already shared the Phase 2 randomized control part of amethyst earlier this year. So now we're sharing the 52-week data, which hopefully will say more about the auditability of response. But no, I think we remain confident in all three trials.

And then as was mentioned, we think this is really highly undertreated, very few biologics have made it. And they haven't really penetrated the market, and we think that is actually related to their treatment response. And we think, with the right mechanism of action, we really have a very -- we would be -- we could meet a very high unmet need in this area.

Go to the next question, please.

David Amsellem, Piper Sandler.

So on EMPAVELI, noticed you are initiating a Phase 2 in FSGS. Wondering broadly how wide of a development net you're going to cast regarding the molecule just given as complement C3 inhibition and how you're thinking about other indications potentially beyond FSGS.

And then, secondly, if you can comment on your anti-CD40 that's Phase 1 ready. Maybe comment on how it's different mechanistically than the CD40 login antagonist, Dazodalibep that Amgen is running a Phase 3 program in Sjogren's. Thank you.

Thank you. Maybe I'll start with EMPAVELI there. So I think we remain excited about the fact that we've broadened EMPAVELI and of course its nephrology indications as well as the paroxysmal nocturnal hemoglobinuria remain very important commercial indications.

But as we've been, we brought this in our legacy of PELAs team was already working up a lot of indications and we looked at these and there were two important nephrology trials that they were considering, one was delayed graft function, which we have paused and we would not be continuing that.

But the FSGS we believe remains a really important indication. And the reason for this is that we believe it's a high unmet need. It does have clarity on primary endpoint and a regulatory pathway, as well as the ability of EMPAVELI to really address the C3/C3D cleavage pathway and thereby impact the autoantibodies. And we have real-world data, but also mutine models where we've seen elevated levels of C3.

So we believe this really is a science-forward approach, and we are being very prudent. We're taking this forward as a Phase 2 proof-of-concept and we could have data really in short order once we initiate the trial. We also already have sought -- I think our EMPAVELI legacy team has already sought FDA feedback. So this really comes with a really nice package which we believe is worth prosecuting. So that's where we are.

We will be looking across really where does complement specifically C3 have a large role in disease. But the other part, as I mentioned in the other example just shortly -- a short while ago, is really the value proposition. So we are always looking at the addressable market.

For example, with this FSGS, we know there's about 27,000 patients in the US, we know there's four types. We will be running a very clear and decision-enabling trial to really give us next steps.

Now, with regard shifting to your second question about the anti-CD40, we remain excited about the pathway. We think it's differentiated and, it could be something that we bring forward also in autoimmune disease. We haven't shared that yet, but we will be communicating more when the time is right.

Thanks, Priya. Jessica, can we go to the next question, please?

Alex Hammond, Wolfe Research.

So it's been a few weeks since you've posted or presented the full CELIA data at AAIC. I guess given it's been some time for you to digest reactions from the medical and regulatory community, what feedback have you been getting? Has there been any feedback that's kind of shifted your thinking at all in the Phase 3 trial design, particularly the potential for early combination with [a-beta] antibodies? Thank you.

Yeah, I'll take that one. And as I said in my remarks, Diranersen is really part of the longer-term story of Biogen. And the Phase 2 was really an exploratory study. And the main objective was really to see if you reduce tau, could you move cognition? Because up until now, tau has been a theory. It's been a favorite theory, but it's still a theory. And this is the first time anybody has shown any data on this.

Now, the business decision really to go forward with that is Priya had already -- when we got the data, arranged for an independent biostatistician to review the data. We had an outside XKME review the data before we announced it. Done multiple advisory groups. We had the AAIC.

One of the very strong feedbacks is the signal is real. This is not due to chance. A lot of people got there doing a lot of over-analysis of the dosing question. There's a lot of different hypotheses. There's one, it's very clear that tau is important to neurotransmission. And so while too much is not good, maybe too little is also not good.

We just don't know. This is the issue of being in breakthrough. It's very exciting, but it's also one of the reasons we decided not to build the company on this type of product. This is one of these high risk, high reward. We're doing a lot of investigation and discussion with the neurology community. And obviously, we'll be consulting with the FDA.

We also have long-term extension data that are coming along, and we'll make those available. But this is a long-term investment. We're confident in the signal. And it could be an exciting option, but it's still going to have to go through Phase 3, and it's not something that's going to affect Biogen's growth over the rest of this decade. So that's all we really want to say about Diranersen at this stage.

Thanks, Chris. Let's go to the next question, please.

Brian Abrahams, RBC Capital Markets.

On SubQ LEQEMBI induction, just curious what the initial demand or interest has looked like on the ground here versus your expectations. And then your latest views on the access dynamics and potential timelines there. Thanks.

As earlier this month, we received approval for LEQEMBI IQLIK for induction, and it will be available by the end of August in market. So what we've done is our field teams are trained, we are educating the HCPs and letting them know availability is expected next month. So we've already had some demand, of course, it's not getting filled yet, but they are put into a queue.

And so we've had, we know as of yesterday, several physicians have already written scripts and so we're not really counting that yet in our expectations until the product is actually readily available for arket. So we're keeping a close eye on that.

Now, as you also know, Eisai is trying to make access very easy for this and as simple as possible and they are the ones working with the payers on Part D access. And so, we will find out again in several months what kind of access to receive at the beginning of next year.

However, even if some of the Part D plans don't contract for LEQEMBI, the other route which they've been going through with IQLIK maintenance has been medical exceptions. Now, when we pull the data to look at the medical exception rate for the product, it is quite high. Higher than most other therapeutic areas.

And so, even when a physician does put that through, the grant approval rate is high, meaning that they are getting the product for the patient. And so, it remains to be seen what happens as of 1/1 next year for the coverage, which by the way, even if you get a Part D plan coverage, a prior auth must be filled out. So a doctor is either filling out a prior auth or filling out a medical exception form for the product.

So we also believe that based on the market research that we have done recently, IQLIK will evolve this market and will be another contributor to growth once it gets off the ground. Now, keep in mind, a lot of the protocols for LEQEMBI are written for IV. And so, a lot of the IDNs and hospitals and systems are starting to rewrite those to incorporate IQLIK obviously also into their workflow.

And we also see that, and Chris had mentioned earlier, when you look at drop-off rates, which, there's drop-offs at many points in a patient journey, but one particularly is when they finally get to a physician who believes in AATs and goes to prescribe the product, one of the largest drop-offs are patients not wanting to take IV in general, that is agnostic of LEQEMBI or of Kisunla.

We also believe in our market research, it shows that those patients would opt on to doing subQ. And so, there is a big portion of patients that drop off exactly for that reason. And so, we believe that that will also help accelerate the market.

Go to our next question, please, Jess.

Paul Matteis, Stifel.

How are you guys thinking about the brain shuttle space right now? And as you think about yourselves investing so much in building this Alzheimer's market, do you feel like Biogen needs to have a brain shuttle to capture what the peak sales potential of a-betas is going to look like? And if so, what's the best way to get there? Thank you.

It's a very important area for us and has been for a while, precedes any data readouts that we've had recently. So that's what I can tell you. We are working internally. We're also looking externally, and we've been doing the work on shuttle delivery really deeply here. So we remain very interested in getting to tissue delivery modalities, and I think we would think about that across several targets.

That's what I can share, but it's a high priority for us.

Yeah, I mean, longer-term Alzheimer's is certainly going to be a core part of the portfolio of Biogen, particularly now that, there's a very good chance that Diranersen ultimately makes it to market. Clearly, we have to go through the Phase 3 program.

But again, I think, what really is important for this market, and you talk to physicians to actually treat patients, it's really moving cognition. So that's what has caused us to go forward with Diranersen. Now, then it probably makes sense to have a portfolio of products. And we're already even talking internally, and we haven't made any decisions yet, but are you going to combine an a-beta with an anti-tau, for example.

There's a question of, well, maybe you don't even need to take, after you do, say, three, four injections of anti-tau, maybe you need just an anti-A-beta to actually keep the tau from coming back. But all of those things are kind of what we're gaining. This could be something that certainly would affect the business in the next decade.

But I think if we're going to be in Alzheimer's, we are certainly looking to have a portfolio. And clearly, brain shuttles would be the next generation of products to pursue. And as Priya said, we've been working on that for several years now.

Let me try and squeeze two last ones. Can we go to the next one, please, Jeff?

Evan Segerman, BMO Capital Markets.

I think, Chris, you had mentioned Felzartamab and AMR could be a $2 billion opportunity, but that's really not reflected in Biogen's current valuation. What do you think we as investors need to see to be convinced of that? And what could you be showing us when we get that data come next year? Thank you so much.

One of the things that we saw when we were doing diligence on the PELAs was that there really hadn't been much value associated with EMPAVELI, and I think there is a tendency to really focus on lead products in companies. And for some of these programs where there is no treatment, there are also no analogs.

And so, I think what we see is and what we've heard from a number of analysts and experts is that there tends to be a placeholder value put in there. And people then want to wait and see the data. But $11,000 patients and if you took even the Otsuka price for Eigen of $350,000, you're getting somewhere between a $3 billion and $4 billion market.

And when you consider that the Phase 2 data showed an 80% resolution of AMR, in an open label, in a small study, and obviously something we have to repeat in a Phase 3, but there is no product approved for AMR today. And the option for patients is either treatment with Felzartamab or perhaps a second kidney transplant.

I mean, I was in Brazil recently and visited the hospital where they do more kidney transplants than anywhere else in the world. They estimate that somewhere between 10% and 20% of people on the kidney transplant list are people who have already had a kidney transplant. So there is a huge unmet need. This is a product that really seems to work. So we have very high hopes for this product.

Thanks, Chris. Let's go to our last question, please, Jess.

Teerence Flynn, Morgan Stanley.

Maybe just a follow-up on that last point. This is probably for Chris or Priya. Just in terms of the TRANSCEND trial, can you remind us of the powering on the primary endpoint and what's required from the FDA to support approval in the late AMR indication? And then how should we think about lateral implications from TRANSCEND for microvascular inflammation? Thanks.

Yeah, I can start. I mean, we haven't commented publicly on the powering. We believe we have a very robust trial design and power to really give us confidence in the outcome. So I think we remain confident in our trial design. As you know the trial -- the TRANSCEND trial is a six-month placebo controlled. This is biopsy driven as an endpoint, which is really important.

And then patients move on to maintenance for the next six months. And I think durability, but the six-month time point are both important. We have been able to -- I think that's another really good sign, but we've been able to accelerate the trial. So now we expect data in the first half of 2027. And I think, overall, we remain really excited.

Now, the MDI is obviously a more recent diagnostic criteria through the BAMS criteria. And this is important because these are donor-specific antibody-negative patients, but it's a very important population. And what we decided to do along with our high bio team. They are absolute experts in the area, is to actually initiate the MVI trial, which is a transpire trial, as soon as possible. So that trial is already underway.

And so, we will also have data emerging from that trial. And we think that, yes, the Felzartamab mechanism of action of addressing plasma cells and the anti-CD38 will have an impact in both NVI as well as in AMR.

NVI itself in the US is a sizable population of about 6,000 patients. So, this remains an important auxiliary but very important aspect of the unmet need. So we think this is really a very important opportunity, and we remain confident that Felzartamab really has a very good high probability here of giving us the data that we're looking for.

Thanks, Priya. Thanks, everybody, for joining us today. If you've got follow-up questions where to find us. Take care.

Thank you. Ladies and gentlemen, that will conclude today's call. We thank you for your participation. You may disconnect at this time.