BIIB - Biogen Inc. (BIIB) J.P. Morgan 42nd Annual Healthcare Conference (Transcript)

2024-01-08 16:48:08 ET

Biogen Inc. (BIIB)

J.P. Morgan 42nd Annual Healthcare Conference

January 08, 2024 02:15 PM EST

Company Participants

Chris Viehbacher - CEO

Conference Call Participants

Chris Schott - J.P. Morgan

Presentation

Chris Schott

So good morning, everybody. I'm Chris Schott at JPMorgan, and it is my pleasure to be hosting a fireside chat today with Chris Viehbacher who joined Biogen as CEO, I guess, a little bit over a year ago. So, Chris, Happy New Year.

Chris Viehbacher

Happy new year to you too, Chris.

Chris Schott

Yes. So, I think we were talking before, but a year ago, we were sitting in same two seats. You had just come on as CEO. So, I would love to start the conversation with just your reflections on how the last year has gone, anything that surprised you out of positive or negative in the CEO seat? And we will kick off from there.

Chris Viehbacher

Thanks, Chris. It was a busy year in 2023. A year ago, we were still as a company kind of still under the cloud of ADUHELM. We have been declining already for three years. We have talked about our melting iceberg of the MS franchise. A lot of investors had said, you have got a fairly immature product portfolio. Why is your cost base so high? So, I think last year, I said our objective is really return to growth. And obviously, that's important for investors, but it is also important inside the company. A company that is declining year-on-year, it is how do you get motivated? And all your business metrics don't really work all that well, because you are trying to do less bad.

So, we outlined five things that we thought were going to be important. One was we had to shift the whole focus of the company from MS to new growth drivers and that is actually not that easy. We have been doing MS for 45 years, and there are an awful lot of relationships with physicians and patients, and yet unfortunately, we don't have a new medicine to launch. So, we needed to move towards LEQEMBI and at that time Zuranolone. LEQEMBI, of course, has had, not only accelerated approval. We got full approval. Then people were concerned around CMS. CMS came through.

The registry hasn't been difficult. We always knew it was going to be a slow ramp because this is such a pioneering activity. And on Zuranolone, of course, we only got postpartum depression and not the MDD. But I think even postpartum depression, obviously, huge unmet need, massive media interest and I think we are off to a good start with the launch.

Second thing was, we said, our R&D pipeline had an awful lot of things in there that didn't really make any sense. So, with Priya's help, we went through and really weeded out a number of projects that were costing an awful lot of money but didn't have an awful lot of value. The third one was to look at our cost base. And we didn't just do a cost reduction exercise. We decided to completely redesign the company.

We said, what do we need to be successful in 2025 with the products we have, with the research and development we are doing? And let's build that company and then basically manage out the other aspects that weren't going to contribute in the future. And so, we announced $1 billion of gross cost savings with about $800 million net.

We also had a couple of products that people were not paying as much attention to VUMERITY and SPINRAZA. I mean, if you looked at analyst forecast, they had, well, SPINRAZA is going to decline. There's a gene therapy. There's an oral. Oral always beats an infusion.

Well, the reality is that more serious a disease, the more efficacy matters. And I think that's what we're seeing. And we put new energy behind both VUMERITY and SPINRAZA, and we're seeing those products stabilized and even growing. And then we really also had to look at, what else could we do outside the company. We needed more for growth and we started an exercise early in the New Year and did the Reata acquisition in August. That's actually financially good because now that we have European approval. We can certainly say that the IRR is greater than WACC, which it's not necessarily something you see every day in M&A in our business, but it's hugely important strategically for us.

So now I think we're a well-positioned to return to growth, and I think we're in a much different place than where we were a year ago.

Question-and-Answer Session

Q - Chris Schott

But when I think about those kinds of challenges and opportunities at the company, where do you think you've made the most progress, and where do you think there's still the most work to do?

Chris Viehbacher

Well, in business, it's always easier to do restructuring. So, we're certainly well ahead on the cost savings. We've done a great job, I think, of really getting our R&D focused. It's a lot harder to build and grow. And so, I think this year is really about execution. We've got all of the elements that we need. LEQEMBI, I think, we're seeing some really good progress on that launch, but we're just launching PPD. Our team was just out in the field as of last week. SKYCLARYS is off to a very good launch. We had something like 25% of the entire population on drug by the end of last year.

But I think we also have to think about the pipeline. I'm going to spend an awful lot of time on our pipeline. We have a lot of very interesting scientifically superb assets in there if they work, but it's still a fairly risky pipeline. And I'd like to bring in some assets and Priya's interested and Adam's interested in doing this too, building that pipeline out for longer term sustainable growth.

Chris Schott

Okay. That's great. Maybe pivoting over to LEQEMBI. Just an update in terms of the launch and progress you've made addressing some of the barriers you've taken?

Chris Viehbacher

Right. You know, one of the things that we have to remember with the LEQEMBI is that we are dealing with pioneering and breakthrough almost every day. Remember, until about a year ago, there was still an awful lot of question about did it add value to remove amyloid plaque? And the CLARITY study clearly demonstrated that. Not only in terms of CDRs, some of boxes, but in terms of activities of daily life.

But, of course, up until now, there hasn't really been any disease modifying treatments for Alzheimer's patients. And most of them are actually being seen by primary care physicians. So now there's kind of a rush, we got to get appointments with the neurologists. Not everybody who has Alzheimer's is eligible for treatment. They have to be cognitively assessed as to whether they have MCI or early dementia. This is changing an awful lot of how neurologists practice medicine. There's a lot of teamwork that's needed, we need the PET scans, the MRI to monitor.

One of the things that we're looking at though are reimbursement has not been an issue. CMS came out, not only on reimbursement of LEQEMBI, but also on the PET scans. And some of the things that are quite interest, because of the lengthy sales cycle, it can be two to three months between the time someone says, I want to go see a neurologist before they actually get drugged in arm. And so, what we're trying to do is look upstream and see what kind of indicators we have for progress.

So, numbers of PET scans are going up. When we talk to people who are providing the PET scans, they're seeing lots of activity. People who are providing the blood-based biomarkers and diagnostics are seeing increased activity. We're seeing a significant increase in the numbers of new patient starts on the registry. And in terms of reimbursement, CMS said, okay. We're now changing and clarifying the reimbursement for PET scans. But that has to be pulled through by the dozen or so max that are out there. And they typically don't move that quickly, but they have moved faster than anybody has ever seen before.

A lot of the IDMs were on formulary, and they have done out of cycle, P&T committee meetings because they see it as an urgency. We certainly have patients waiting, for treatment. So, the real job is just establishing the care, pathways getting the policies in place and, the blocking and tackling of being able to process the patients. So, I think we're feeling pretty good. I'm looking forward to seeing how the January sales, play out. A lot of positive data in December, but December is kind of a funny month with the holiday schedule, but I think we're certainly seeing an awful lot of tremendous progress on LEQEMBI.

Chris Schott

So, in terms of the, I just thought the ramp from here, is it really just kind of getting the neurologists kind of getting their treatment paradigms down? In education, is that the biggest gating factor at this point in your view?

Chris Viehbacher

There's going to be a number of things that we have to pioneer. Again because, nobody has been treating patients essentially. So, one of them is I think the primary care physicians will play a role at some point, because patients coming in, if it's hard to find an appointment for a neurologist, one of the best things would be is, can we do a triage of those patients before they get to the neurologist? And this is where the blood-based diagnostics will play a big role.

The next thing is a lot of physicians saying. There's we can't obviously expand the number of neurologists quickly. But not everything has to be done by the neurologists. And so, some of them are hiring nurse practitioners to do some of the work. We're not seeing any capacity constraints on PET scans nor on MRIs nor on infusion centers for the moment. So, I think that will flex.

So largely, it is really around the care pathways and just establishing those. And that increases every day when the number of centers ordering from, when we did Q3 earnings to now was up 37%, for example.

Chris Schott

And like I said on that point, are you seeing in terms of where the prescriptions are coming from? Is this mostly still being driven by kind of top KOLs? Or are you starting to see that broaden out a lot more into the community?

Chris Viehbacher

Actually, it's starting to broaden out. There's still, we've probably got about a target of 10,000, and we're working our way through that.

Chris Schott

And then in terms of your team's efforts, how much time are you spending on, I guess, the broader population versus kind of locking in those core prescribers?

Chris Viehbacher

We're still focused on some of the top centers, largely because we wanted to get the really the go to market model down. We have these, we call them neurology account specialists, NAS'. And that's quite a heavy lift for a specialist because they've got to go in and explain the care pathway with the office. We have to do a lot of education around ARIA.

We have to go through and explain not just the reimbursement for LEQEMBI, but the reimbursement for the physician's time, for the scans, and everything else. And then, by the way, why LEQEMBI, which is the selling proposition. So, it's quite a heavy, detail, if you'd like, and visit with physicians. And we really wanted to get that model. Then there is other people who are just looking after the patient journey. There is people who are looking at regional KOLs. And so, we wanted to get that down and get a certain critical mass. And as sites become ready, then you can start to ramp-up your promotional effort further.

Chris Schott

Just like tying this all together, just help me to bridge a little bit from where we were with the 3Q results in terms of number of patients who are the on drug versus 10,000 patient target by April of '24. I guess my question is, just how confident are you in that number, or is that a number that makes sense to reset at some point?

Chris Viehbacher

Remember, the 10,000 the was really designed to try to give people some sort of milestone, because there are no real analogues for this launch. I haven't found a decent analog anywhere. So, what I think we were trying to say is, this isn't going to be 100,000 patients, but it is not going to be 1,000 either. So that is a trajectory. And I think where we are right now, there is nothing that we are going to do that's going to change us on the trajectory. We will get there. We don't get there. I think everything we are seeing. There is no reason to say that, we can't get there.

But again, the data were kind of choppy in December. So, for me, I am really looking for the January data. But where we are right now is, 10,000 isn't really what we are interested anymore. It's how do we now get to the 100,000? And the so that's where we are focused. But you can't get to the 100,000 unless you have really got this go to market strategy really nailed down. And I think we are increasingly confident in that model.

Chris Schott

So, your focus is more making sure you are getting the thumb drawing pieces in place and the number is the number [indiscernible]. The other question I always get is just duration of therapy. I know you have talked about the importance of continuous dosing. Some of the feedback we get from physicians is a bit bifurcated of some wanting to basically dose the plaque clearance, and others looking at longer-term. How are you thinking about how that plays out?

Chris Viehbacher

Well, remember, we are probably going to be always well ahead of where physicians are because right now, the physicians are interested in what's in the label and do we have approved. And of course, that's all we can go out and tell. But as we think strategically, about where this product is going, we are looking at other data.

So, right now, you are right. This CLARITY study showed, okay, you removed the plaque and you demonstrated cognitive benefit. But the first question is, what happens when you stop? And we showed at CTAD last October that, actually in a 24-month extension study, actually, there is a benefit to continuing on therapy. So, we will be -- we intend to file for a maintenance indication, by the end of the first quarter of this year.

But the other was, why did so many drugs fail before LEQEMBI? And there were really two reasons. One was, could you get enough drug across the blood brain barrier? And the second one was, were you in the right patient? And we all learned, okay, we needed to move earlier. And now we obviously with LEQEMBI are getting into the brain with the quantities we need. But have we still found the right patient? And some of the data we showed was a sub-study of CLARITY where we looked at really low tau patients, so really early patients.

Those data are really striking because now you are seeing something like 75%, 76% of patients completely stable on the first six months of therapy. And intriguingly, which was really amazing, we actually saw an improvement. So how can that improve? My neurons are dead or they are not dead? It turns out that maybe that's not the case. And I think those data are interesting because the there is a promise if we can actually show these results in the AHEAD clinical study that we have ongoing. It's going to make sense that we go even before patients have symptoms.

The earlier you go, before too many neurons have been damaged or killed, you're going to get a benefit. That's at least the promise that I think we are seeing out of that data. Now we have to prove that with the clinical trial that's ongoing. So, you could actually see people on drug for quite a long time.

And, is prevention even a possibility? That you have to think about for the longer term. But the other interesting aspect of those data were why did you see an improvement? And nobody had seen that. And it seems like there are these protofibrils, which are in the soluble element of the amyloid plaque. And those protofibrils seem to have some impact. That's at least the view of some KOLs on synaptic function.

Now LEQEMBI operates on those, has an efficacy against those protofibrils that other products don't have. And so, again, if we can actually continue to do research and show that we can get into the right patients earlier, we could actually really have a dramatic impact on the course of this disease.

Chris Schott

Yes. I mean, those earlier stage data sets are really exciting, so it'll be to watch the preclinical studies pretty closely. The other question I've just done, a bigger picture with relationship with your partner here. Can you just talk about how the commercialization rules are setting up today, just the general status of the relationship?

Chris Viehbacher

So, we started with, the U.S. This is the first country. And as I described, this go-to-market model is pretty complicated. And for those of us who've been in this industry a long time and you're working in co-promoting or in co-marketing, these are not easy things to actually execute on. And so, we decided in the U.S., let's just have one of the companies go out there in a Phase 1, if you like, really establish the go-to-market model. And at such time, as we decide to increase, then let's talk about what role for instance Biogen will play. And that was in the U.S.

Now outside the U.S., because I think we've gotten a lot of information around go-to-market model, I'm actually flying to Japan tomorrow night for the launch of LEQEMBI in Japan. And Biogen is in the front lines of launching LEQEMBI in Japan. And that's our intention to do in Europe as well. So, one of the things that we have tried to do is how do you make this relationship, not only work together collaboratively but how do you make it efficacious and efficient, because there's an inherent inefficiency when you get two companies trying to do things.

And what you find is every company wants to do half of everything. And that is hugely inefficient. So, I think we are both conscious of the fact that we have invested a lot of money in this. And how do we make this collaboration profitable as well as successful.

Chris Schott

It sounds like ex-U.S., it's more blended model. Does the U.S. model evolve, do you expect over time?

Chris Viehbacher

I do expect that, yes.

Chris Schott

Okay. That's something this year that…

Chris Viehbacher

I'll probably give you an update of that with Q4.

Chris Schott

Okay. We'll watch closely there. Other question just on LEQEMBI is subcu. So just help us put some of the data we saw last year into context in terms of your confidence in that program?

Chris Viehbacher

Again, here we got another breakthrough. I mean, how do you get an antibody through the issues in the end of the brain. And this is the first time that someone has demonstrated that we can do that on a bioequivalent basis. So that's a huge success, and that's going to be extremely important because as we talked about, we're going to be on patients will likely go to be on drug, longer over time as the clinical trials read out and we get some of these other indications approved.

And so obviously, the biweekly infusion is not going to be very convenient. So, the subcu will play a big role. We're obviously in a lot of discussion with the FDA and there is still an intent to file an approval for subcu at the end of the Q1 of this year.

Chris Schott

So, I guess in terms of the data we saw, do you think there'll need to be a dose adjustment? Or do you feel comfortable with the dosing that you?

Chris Viehbacher

Well, first, we only saw 6-month data. So, we now have to get the 12-month data. And so, we'll look at that, and we'll have a discussion with the FDA. But I think there is still an awful lot of confidence that we can file a subcu at the end of the first quarter.

Chris Schott

I guess just huge then putting them into broader context, how important is subcu for LEQEMBI in terms of the uptake?

Chris Viehbacher

Over time, I think it's going to be hugely important. There are some people that think, well, subcu is really important short term. I'm not as convinced about that, because everything we've talked about is really prior to the initiation of treatment, getting through the cognitive assessment, getting the PET scans, and everything else. And the subcu versus infusion doesn't really have an impact on that.

And for the initial period of plaque removal, but I think as we look to maintenance therapy. And if we're looking at going earlier and patients staying on drug, I think the subcu is extremely important for the long-term development of LEQEMBI for sure.

Chris Schott

Maybe just one last one. As I think about broader use of blood-based diagnostics, how important is that going to be of maybe having less need for PET scans in terms of the uptake of these products?

Chris Viehbacher

I think it's going to be a game changer. Most Alzheimer's patients are at primary care and Alzheimer's is not simple to diagnose. So, is this normal aging? Is this dementia? Is this Alzheimer's? And it can take quite a while. It can take years, before someone actually says, well, I think you really need to go see a neurologist. And this is where the first role of these blood-based the diagnostics can play a role, because you can get a much clearer read on, is this Alzheimer's or is this dementia, for example.

It can play a role, I think, in triaging the patients so that those who really are eligible are the ones who go to see the neurologist. And over time what the companies who provide these diagnostics are doing are looking at validating these diagnostics such that you could get a confirmed diagnosis of Alzheimer's in place of a PET scan or a CSF. That'll probably take another two years to three years. But it's quite interesting. Until you actually have a treatment, there isn't the same investment in diagnosis. And we see this also in rare diseases. And I think that's what's happening.

Now there's a treatment. So now the diagnostics have been around, but nobody was really interested amusing then if I didn't have a treatment. So now there's an awful lot of activity. I mean, Quest and LabCorp, [ph] CN2, these are all companies that are working a lot to bring these diagnostics to market. And they're actually out there and being used today.

Chris Schott

As we think about over time, those of us can be a key piece of this. Excellent. So maybe just pivoting a little bit to SKYCLARYS. So maybe just start with this update on the U.S. launch and how that's progressing?

Chris Viehbacher

There's a tremendous launch. I think when we start comparing this to analogs. We are outperforming all performing all the analogs, even our own SPINRAZA. There are a couple of reasons for that. One is, remember SKYCLARYS was originally approved but then couldn't come to the market because there was a manufacturing issue. And so, it didn't actually get to market until July. So, there was no question that there was some warehousing of patients, and we saw that. But there's also an extremely active patient advocacy group. That has been hugely helpful in really raising awareness of the disease and the availability of treatment.

We are seeing that same kind of interest actually outside the U.S. And remember, one of the interesting things about rare diseases is we are not so U.S. market dependent. If you look at SPINRAZA, two-thirds of our sales are actually outside the U.S. and we expect the interesting to be with SKYCLARYS. So, we are in the process of setting up early access programs in a number of European countries. Actually, Latin America is expected to be a big market. There is no market in Asia just because of the genetic makeup of these patients. But, it is off to a very strong start and we are very pleased with the launch.

Chris Schott

Great. Maybe just digging in a little bit more detail on the European market. Just elaborate a little bit more versus the U.S. in terms of patient identification, patient advocacy. There are similarities and differences, I guess, to think about how that ramp could go.

Chris Viehbacher

I mean, there is two differences, I guess. On the one hand, patient advocacy groups are not quite as well developed. But the main group, FARA, for instance is already establishing itself in Europe. But there are going to be other groups that will be helpful. At the same time, you only have single payer systems. And actually, if you are in the business of vaccines or if you are in the business of rare diseases, those single payer systems are actually quite helpful. I mean, one of the things that Alicia deals with in launching in the U.S. is that, you still have to go around all these payers and then there is issues about getting the refills. You don't really have any of that in Europe. And generally, the pricing is actually quite acceptable in Europe.

We certainly saw that with SPINRAZA. So, we are using SPINRAZA as an analog. And I think that's why there was so much attention to the European approval. It is not usual that the European approval really matters to most drugs. But on this one, it does. So, we have had outreach from 26 countries around the world, who are inquiring when is the drug going to be available. So, there is nothing else out there for these patients. The next major thing that we have to do is launch a pediatric study, because a lot of patients are actually diagnosed under the age of 16 and we don't have that in our indication statement today.

Chris Schott

Great. Maybe post Reata can you just talk about financing capacity? And I think you mentioned before, kind of this your desire to de risk the pipeline a little bit more, kind of where's the BD focused right now? Is it pipeline versus at market?

Chris Viehbacher

We couldn't afford to do another Reata at least this year. But we are generating quite a bit of cash flow every year. We certainly have the capability of doing licensing deals. And I am not sure we need to do another, Reata. I mean, if we found one, I think we would. But I think we are really going to be focused on earlier-stage licensing. A lot of our pipeline are ASOs from Ionis and they address huge unmet needs. And again, if successful, each of them, whether it is an Angelman or Sporadic ALS, we have another ASO for tau is a crown jewel in the pipeline.

And plus, we have two molecules for lupus, one partnered with UCB and we have our own Dupilumab for SLE and CLE. But Biogen has always been out there on the risk curve on the development. And we would like to complement the pipeline with more assets in rare diseases and in certain defined areas of immunology. And part of the reason for that is, in most of what we do at Biogen, we can't do a proof-of-concept study.

So, we are doing these regulatory studies, these approval studies, lengthy, expensive and have no idea whether they are going to work or not. And I think what we would like to do is have parts of our R&D come through a classical drug development chain where we can do a Phase 2 and safety and efficiency before we spend money on a pivotal studies. And rare diseases, I think, really fits with our commercial capabilities as well as our scientific capabilities. And Biogen has always been an immunology company. I mean, we've been in MS from sort of the get go. So, I think we can expand our pipeline range without having to acquire an awful lot of new capability.

Chris Schott

I'm sorry, kind of what you're thinking about by tuck-in kind of centered around those areas.

Chris Viehbacher

And research, we've hired a new head of research with Dr. Jane Grogan. And there, again, I think we can do so much more. It's just if you're Biogen, we're in one of the most prolific R&D centers in the world. And we've done some collaborations, but I think we're going to be looking to increase the amount of collaborations that we're doing. In the Boston Cambridge area, but I think Jane is comes from the West Coast, and I'd like to make sure that Biogen is as present in the West Coast as it is on the East goes.

Chris Schott

Maybe just shifting to kind of P&L and base business. Maybe to start with just thinking about 2024, kind of pushes and pulls we should keep in mind for the portfolio?

Chris Viehbacher

Well, I think, a couple of things. One is, remember, we did a transaction, for $7.5 billion. If we'd have done it two years ago or three years ago, money was didn't cost anything. And so, obviously, we had a lot of interest income on the money, we had in the bank that we're not going to have this year. So, remember that when you get below operating income that there's not as much interest income as we did last year.

But equally, there are a number of positives. First is that, we're shifting the revenue mix, so getting a lot more product revenue and less contract manufacturing revenue, which has a positive accretive benefit on gross margin. Second thing is we have a huge facility in Switzerland in SolarTurn [ph] for the manufacture of LEQEMBI. So, we had an awful lot of idle capacity costs last year that we're not going to have this year.

And then you have SKYCLARYS, which is a small molecule and has a high gross margin. So, I would say we're going to have a better gross margin this year. And you're going to see some of the flow through of fit for growth, flowing through on our OpEx line. So, we're certainly, we've targeted 2025 to have OpEx to revenue ratios, equal to our peers.

Chris Schott

And when I think about kind of Biogen's trough year into whether it's revenue or EPS. When should we kind of think about that trough hitting and the company kind of heading to growth?

Chris Viehbacher

We'll give you an update on that Q4.

Chris Schott

Okay. Stay tuned, it sounds like there.

Chris Viehbacher

I think we have all of the elements to grow now. So, but, I don't want to put out a press release today.

Chris Schott

Maybe just one last, just touching on the margins again. With the new accounting for LEQEMBI, I think you mentioned by 2025, has margins normalizing. Just what's a reasonable margin to think about for your business looking out, four to six years as we think about SKYCLARYS ramping, LEQEMBI becoming a bigger contributor? Like what does that look like?

Chris Viehbacher

I think Q1 SG&A roughly around 20%, 21%, 22%. It all depends on where you are in launch cycles. Obviously, companies that are launching, have a little bit lower ratio, some would mature. But I think if we're over time around the 20% and R&D around 20%, so we've got kind of a total OpEx to revenue ratio of 40%.

The one thing I would say in a company like Biogen, in my days at Sanofi, we always were focused on this 15%. I think Biogen has a much higher scientific level than most companies. I wouldn't want to constrain our R&D budget if we actually find projects. I think we've established a lot of discipline, and that if we're going to invest, there's going to, we think that we've got a real discipline to make sure that only things that make sense are going forward. So that could increase, but then we would have to demonstrate that there's value creation there. But, I wouldn't want to cap us on that. But otherwise, I think if we can get to that, then we'll have a bottom-line that it's comparable to our peers.

Chris Schott

Couple other quick ones. Biosimilar business, just update on that process where you are and how it fits in the portfolio?

Chris Viehbacher

Yes. We'll have another update on that in Q4. That it's a bit of a complicated business, because we sold the equity in the joint venture last year at a very good price. And we have all the distribution rights for Samsung in Europe and we have our own, proprietary biosimilars that we're launching in the U.S. And, so we're in discussion with a number of parties about that. But it's kind of a complicated business still doing, but it's clean, but we don't, I think, it's not necessarily core to Biogen.

Chris Schott

So, the goal is to that's maybe a better owner for that business than Biogen. The other one, just, on at-home. Just update in terms of Biogen's decision of where do you go with that product?

Chris Viehbacher

Yes. I'd like to say that's kind of one of the hardest business problems I have almost ever confronted. You've got a product that clearly works. But the studies to finish the confirmatory studies is pretty significant. And the question is, then by the time you get there, what's the market going to look like? And so, we are actually in discussion with outside parties and outside financial interests and we're coming to the conclusion of that, and we'll give you an update of that in Q4 earnings, too.

Chris Schott

Couple other ones R&D pipeline, I think you mentioned a couple before. But I guess what do you see as the major opportunities in the pipeline? And what should we be paying most attention to?

Chris Viehbacher

Well, one is, Litifilimab, which is actually a homegrown asset. Lupus is a huge opportunity, but it's been a very complex target. I was at GSK when we developed Benlysta. So, I know this disease pretty well. What is and I particularly like, it has a cutaneous lupus. And part of the problem with lupus is you've got numerous organs involved. And I think on the skin side, that we might have a little bit more success.

Certainly, we are getting inbound interest on that product, so that tells me that we're not just believing in our own optimism here. I think the ASO for tau is extremely important. What really started the whole ADUHELM, LEQEMBI progression was a study that Biogen did 10 years ago called fine. And it was in that Phase 1 study where we actually were able to demonstrate for the first time a benefit on cognition.

And I think, if anything, we've seen even more promising data. It's all very early, and we're in a Phase 2 that is ongoing. But if you look at tau, tau determines the severity of Alzheimer's. And we've been able to demonstrate that we can knock down tau antibodies have not because it seems like you have to act intracellularly, so the so is very good for that. And I think that could be another major market in Alzheimer's.

The complementarity between reducing amyloid plaque and reducing tau makes an awful lot of sense over time. So, I think that one is one to watch. But we'll have data, in the first half on our ASO for Angelman's. We'll have some data on the sporadic ALS for ASO as well. So, we've got a number of things that and we have also completed another study in lupus. We have a product in collaboration with UCB, Phase 3 has completed enrollment, and we will have data on that Phase 3 in about the midyear.

Chris Schott

On the tau program, what's the next update we should kind of think about?

Chris Viehbacher

Probably looking at an interim analysis, but it is probably another year or two away. About two years away, Priya? Yes. Two years.

Chris Schott

Excellent. Here is last topic here.

Chris Viehbacher

It's always good to put your H R&D under a little pressure in these meetings.

Chris Schott

Yes. On ZURZUVAE, can you just talk a little bit about just, your admission for how the launch is going and just expectations for the first year for that one?

Chris Viehbacher

The interesting is expectations are quite low. But when you look at it, the unmet need is phenomenal. Only a fraction of women are being treated for this, and it is devastating. And what was amazing is, when ZURZUVAE got approved, we had this unprecedented media wave. I mean, it has been in Time Magazine, on CBS, something like 5 billion media impressions. And I think, what I am hearing from our U.S. team is essentially we are at the crossroads of two major societal trends on women's health and mental health.

And so, actually, there is a huge amount of resonance that we need to help women with this condition helped to display some of the taboos around this and actually provide a treatment that can act quickly. This onset within three days could be quite important for women who are trying to cope with new children and feeling guilty about this. So, we have come up with a commercial plan, which I think recognizes that, we have to build this market and we can do this profitably. But I would actually think that ZURZUVAE is probably an underestimated opportunity, because I think there is upside here.

Chris Schott

And you think PPD only indication can be a profitable business for Biogen?

Chris Viehbacher

I think it can be, yes.

Chris Schott

Excellent. Maybe just to wrap up here in the last minute or two. As I think you walked through some of the pipeline, but if we look at catalysts for 2024, what are you most focused on or kind of updates that we should be watching most closely?

Chris Viehbacher

Clearly, LEQEMBI. Although, LEQEMBI obviously is not profitable this year, but it is a major growth opportunity. SKYCLARYS will really be driving an awful lot of operating revenue as well as top-line revenue, and obviously the cost savings on Fit for Growth. And I think people could be surprised potentially by the gross margin. I think we are going to do better. So, we will be giving update on guidance for the year at Q4. But like I said, I think we are in a much better place than we were a year ago. But we equally recognize we now have to pull this through and execute.

Chris Schott

Thanks again for the discussion today. We made a lot of progress in the first year.

Chris Viehbacher

Thanks, Chris.

Chris Schott

Thanks again for joining us.

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Biogen Inc. (BIIB) J.P. Morgan 42nd Annual Healthcare Conference (Transcript)