Good morning. My name is Cynthia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen third quarter 2026 earnings call and business update. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. Please limit yourself to one question to allow other participants time for questions. If you require any further follow-up, you may press star one again to rejoin the queue. 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, Cynthia, and good morning, everybody. Welcome to Biogen's third 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 you 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 Investor section of biogen.com. We've also posted the slides to our website that we'll use 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; Robin Kramer, our Chief Financial Officer. Alisha Alaimo, President North America, is also available for the Q&A section of the call.
We'll make some opening comments and we'll move to the Q&A session. To allow us to get through as many questions as possible, we'll ask you to kindly limit yourself to just one question. I'll now hand the call over to Chris.
Right. Thank you, Tim. Good morning, everybody. Very strong quarter this morning. It's actually one of those quarters where the numbers almost just speak for themselves. Total revenue grew 11% year-over-year. Of course, that's not all organic. That was significantly benefited from the acquisition of Apellis. I'd also say that I think the acquisition of, and the integration of Apellis has gone even better than expected. The integration team has, I think, been able to identify and eliminate cost synergies faster than we thought. Alisha's here, and I have to give Alisha a lot of credit for her leadership in really ensuring that the Apellis team has felt welcome within Biogen.
I think really the most credit goes to the people from Apellis who have joined Biogen, placed their faith in Biogen, and have been able to look past the inevitable distraction that comes with an integration and really focus on our customers, the healthcare professionals and patients that we serve. As I look at it, obviously Apellis has certainly helped us. Our industry has embraced bolt-on acquisitions over the years, but one of the things I have learned is if you are going to do a bolt-on, you have to bolt onto something solid.
One of the things that we have been working on at Biogen over the last several years is really to improve our cost base, but also to really launch our growth products and get those performing on a top level. That is important because when you do an acquisition, there is an inevitable amount of distraction.
If you have got a team that is already performing well, then it can not only find the time to embrace a new team joining the company, but the new team joining also finds a culture of energy, of positive spirit that becomes infectious in some ways. I think we have really realized a synergy between the folks from Apellis who have joined the Biogen teams. They have come together and when I look at SYFOVRE and EMPAVELI, you can see 37% year-over-year growth of $243 million.
That is already on a run rate of $1 billion. We are on track to realize $250 million of run rate synergies by the end of 2027. In fact, you will see from the guidance that we put out, and Robin will detail this more, but we have reduced our estimate of what the dilution will be in this first year of acquisition.
In fact, most of the dilution will be really from the financing. At an operating level, the dilution is already pretty much negligible. If I look at Biogen's own growth portfolio, $1.26 billion, that is 50% year-over-year growth. That is now almost getting to 2/3 of our core pharmaceutical revenue in Q3. This is where the story has been that we have obviously had a legacy portfolio that continues to be resilient, but the future is really with the growth products. If I go to the next slide, we have really got three key priorities here. One is to continue to grow that commercial portfolio.
As I say, the 50% growth is extremely strong. We expect to return to top-line growth in 2026. I will say that the resilience of the legacy MS portfolio, I have said this in the past, it is not by accident.
Biogen has a unique patient services team. I think we have built strong relationships with key physicians and have earned the trust of a lot of patients. I think that is a capability that is going to be extremely important as we turn to the next priority, which is multi-year registrational data flow. The first point I would make on that is, given the Apellis acquisition, we now think that the company can grow even without the pipeline.
As the pipeline starts to read out, and I think the first readout will be now just weeks away, we think we can be launching products, assuming that clinical trial results are positive. We will be able to launch products on top of a growing base. The other I would say is, there are going to be a number of areas where we are still in breakthrough.
AMR is a market, for instance, that doesn't exist. MVI is a market that doesn't exist. In fact, a lot of education is needed. But we're already seeing high levels of awareness on those. We do know how to create and build markets. We're not a company that is just used to going in and finding an existing market and just taking market share. That will also be important in lupus. Alisha can provide a lot more insight here. But when you look at the lupus market, it is at a fraction of what the MS market is, and there's no real good reason for that. We have found some insights into that. One is that patients will be expected to be on treatment for many years, and with only two approved biologics, physicians tend to conserve those biologics until a patient progresses.
We're certainly seeing an awful lot of feedback from the market that if another biologic does get approved, there would be an enhanced willingness to actually use biologics at an earlier stage. I go back to how Biogen has built its MS business and have been able to retain it in the face of some pretty fierce competition. I think a lot of those capabilities and skills will really enable us to think about how we can actually develop the lupus market way beyond where it is today. Just really in the next 18 months, we've got phase III readouts expected, not only in SLE, but we've got cutaneous lupus, we've got AMR, and our partners at Stoke, we expect to be reporting on zorevunersen in Dravet syndrome.
The third priority I think is one of the most important and often most neglected areas of our industry. This is an area where we at top leadership at Biogen are spending a lot of our time. Because it's in research and early development that you are building the future of your company. We were not necessarily very good with that. We had gone three years without a single IND. Under the leadership of Jane Grogan and in partnership with Priya Singhal, they have done a radical overhaul of the whole research and early development area. We now have six new programs expected with the three NMEs. We've already had five INDs this year. As Priya will tell you, Biogen, in its 48 years of history, has never had five INDs in a single year.
Our ambition is, over the next few years, to have at least 20 programs in early-stage development. This is a big shift in how we operate because Biogen historically has looked at things on an asset-by-asset basis. We are now really thinking about portfolios of opportunities. How do we balance the risk? How do we balance that with franchise development and breakthrough medicines along with best-in-class and not always just first-in-class medicines? So this is an area where we're already planning for the future. In this business, the day you launch a new product is the day you should be thinking about what product is going to succeed it. So those are the three areas. I think it's exciting. The future of Biogen is before us.
And with that, I'll turn it over to Priya who can give us a little bit more insight to the excitement awaiting us.
Thank you, Chris, and good morning, everyone. Over the past few years, you have heard us talk about the pipeline transformation, as Chris just mentioned. I'd like to take a few minutes to remind you of where we are today. Our new Biogen strategy remains centered around delivering a path to sustainable growth over the long term, and we are pleased by the progress we've made in delivering on that goal. This is an exciting time for Biogen, and today, as a result of this strategy, we have built one of the strongest and most diversified late-stage pipelines in Biogen's history, with the potential to address significant unmet need across neurology, immunology, and kidney disease.
We showed you this slide last quarter, and as we previously communicated, due to strong execution by our teams and positive enrollment momentum, we were able to pull forward the TOPAZ-2 SLE readout for litifilimab and the TRANSCEND readout for felzartamab in AMR. So reflected on the slide, I'm pleased that our upcoming registrational readout cycle remains on track, starting with our planned disclosure of the two phase III SLE studies for litifilimab in the first half of December. As we turn beyond that, we expect CLE data from litifilimab as well as AMR data from felzartamab, followed by a readout from zorevunersen in Dravet syndrome, expected in the third quarter of next year. Beyond that, we expect to continue our multi-year cycle of important registrational data flow through the end of the decade.
Each of these upcoming catalysts has the potential to meaningfully shape Biogen's next phase of growth, while most importantly, creating the possibility of new treatment options for patients. As Chris also mentioned, we have remained focused on building and rebuilding our early-stage pipeline. We will continue to focus on our portfolio construction and evaluate internal and external innovation on a program-by-program basis with a scientific and disciplined approach. Looking to the future, I'm excited about how our transformed pipeline has the potential to benefit patients across disease areas, and I look forward to providing updates as we move forward. With that, I would now like to turn the call over to Robin for the financial update. Thank you.
Thank you, Priya. I'm pleased to provide our update on another strong quarterly financial performance. Our results reflect the continued momentum in our commercial portfolio that we've seen throughout this year, and Q3 marks the first full quarter with SYFOVRE and EMPAVELI in our growth portfolio. Total third quarter core pharmaceutical revenue was $2 billion, up 18% year-over-year and 9% quarter-over-quarter. This was driven by the continued strong performance of our growth portfolio, which generated approximately $1.3 billion of revenue in the quarter, up 49% year-over-year and 19% quarter-over-quarter. In addition, SYFOVRE and EMPAVELI together contributed $243 million in Q3 2026. Our portfolio now represents approximately 63% of our total core pharmaceutical revenue. This quarter's results demonstrate continued strong commercial execution and emphasizes the significant progress we've made in our portfolio transition.
Let me now take you through key highlights from our core pharmaceutical product performance in the third quarter. First, the growth portfolio. SPINRAZA revenue was $461 million, up 23% year-over-year and 15% quarter-over-quarter. This performance was driven primarily by rapid patient conversion to the high-dose regimen, with the quarter reflecting a meaningful revenue tailwind associated with the one-time transition doses for patients converting from low-dose SPINRAZA. As the conversion cohort matures and dosing patterns normalize, especially in the U.S., we expect global Q4 revenue to be up approximately a mid-single -digit percentage versus the fourth quarter of 2025. We are pleased with the rapid pace of conversion to high dose, which has exceeded our expectations. We believe the enthusiasm from patient and prescriber communities is encouraging for the opportunity for salanersen. VUMERITY revenue was $192 million, down 11% year-over-year and 2% quarter-over-quarter.
Revenue in the quarter was impacted by a shift in the Part D landscape, where payers have adopted a tighter approach to formulary management, a broader macro trend that we are seeing across the industry. We expect to continue to see this formulary dynamic affect Part D drugs like VUMERITY this year. As a result, we expect fourth quarter revenue for VUMERITY to be roughly flat sequentially or up approximately a mid-single-digit percentage versus the fourth quarter of 2025. Beyond that, we believe these dynamics establish a new base from which VUMERITY can grow. LEQEMBI in-market revenue was $202 million, up 67% year-over-year and 10% quarter-over-quarter, as we've seen a continuation of market growth in key geographies. We are in the early phases of the IQLIK launch and have started to see some uptake in the U.S.
Patients can currently access reimbursement for IQLIK through a medical exception process. We expect uptake to be gated by broader reimbursement. With coverage plans now being finalized, we're encouraged that at least 50% of covered lives are expected to have coverage in both the initiation and maintenance administrations starting in 2027, which should support IQLIK adoption as we move into the next year. SKYCLARYS saw patient demand growth both in the U.S. and ex-U.S., with revenue of $178 million, representing 34% growth year-over-year and 6% quarter-over-quarter. Third quarter performance also reflects favorable inventory dynamics, including an inventory build of approximately $12 million that we expect to be drawn down in Q4. For our legacy MS portfolio, TYSABRI revenue of $437 million was up 1% year-over-year.
U.S. revenue benefited from year-over-year inventory dynamics, while the European business continues to show stability driven by the subcutaneous formulation. We have been pleased that TYSABRI has been able to demonstrate meaningful resilience in light of a competitive MS market. Let me now turn to SYFOVRE and EMPAVELI. Q3 represents the first full quarter of operations following the close of the Apellis acquisition in May. The integration has continued to progress well with both SYFOVRE and EMPAVELI having another strong performance this quarter. SYFOVRE revenue was $191 million, up 27% year-over-year, driven by continued commercial injection volume growth, which was up 18% year-over-year and 7% quarter-over-quarter. The third quarter has the strongest commercial injection quarter since launch, and SYFOVRE continues to demonstrate market leadership in geographic atrophy.
I would note that third quarter results include approximately an $11 million inventory build, which we expect to be drawn down in Q4. Looking forward to Q4, we also anticipate our price will normalize back to historic levels following a one-time price benefit related to the launch of the co-pack. Despite this, we expect fourth quarter revenue to be up approximately a mid-single-digit percentage versus the $155 million reported by Apellis in the fourth quarter of 2025. EMPAVELI revenue was $52 million, which was up 11% quarter-over-quarter, driven by strong demand for the nephrology indication, C3G and primary IC-MPGN. Sequential demand for PNH remains stable, and with this market being highly competitive, we are hiring a dedicated sales force to drive PNH penetration.
In light of this commercial performance and the pace of integration synergy capture, we believe this transaction is now roughly neutral on an operating basis, and we expect the transaction to be less diluted in 2026. We continue to expect the transaction to be accretive to non-GAAP diluted EPS in 2027, generating at least $250 million of run rate synergies by the end of 2027. Now turning to financial highlights for the quarter. Total revenue was $2.8 billion, up 11% year-over-year. This marks an acceleration in our top-line growth trajectory, supported by the impact of the Apellis acquisition on our overall revenue profile. Non-GAAP core OPEX, or combined R&D and SG&A expense, increased 27% year-over-year.
This increase primarily reflects the expected impact of Apellis operating expenses, as well as continued investment in our phase III programs: litifilimab in SLE and CLE, felzartamab in AMR, zorevunersen in Dravet syndrome, and salanersen in SMA, as well as support for the U.S. and international product launches and pre-launch activities for our late-stage pipeline assets. As we previously announced, we recorded $284 million of acquired IPR&D and milestone charges in Q3 2026, largely associated with our Reata acquisition. This reflects an approximately $1.70 impact to non-GAAP diluted EPS and approximately $1.65 impact to GAAP diluted EPS.
GAAP EPS was a loss of $0.14, impacted by the IPR&D and milestone charges I noted, 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, as well as restructuring costs related to the Apellis acquisition. Now turning to cash flow and the balance sheet. We continue to generate strong cash flow with $600 million of free cash flow generated in the third quarter of 2026. We exited the quarter with $1.3 billion of cash and $6.4 billion of net debt. During the third quarter, we repaid $400 million of the term loans related to the Apellis acquisition. We have now repaid $600 million in total and continue to expect to repay the remaining $1.4 billion of term loans by the end of 2027. Now turning to guidance.
As you heard this morning, we have continued the good business momentum in the third quarter and importantly remain on track to deliver top-line growth for the first time in several years. We have been encouraged by the faster synergy capture from the Apellis acquisition, resulting in favorability in the expected 2026 dilution. We are pleased to be raising the lower-end of our reported full-year 2026 non-GAAP diluted EPS range to between $12.20 and $13. The business performance from the third quarter also reflects strength from execution, including acceleration of revenue from the pace of conversion from the high-dose regimen of SPINRAZA in Q3. We also expect some typical Q4 phasing as well as SKYCLARYS inventory dynamics I spoke about a few moments ago, and continue to expect lower contract manufacturing revenue in the fourth quarter due to timing of batch commitments.
Reflecting on where we are today in relation to core operating expenses, we are pleased to have captured some of the Apellis synergies faster than expected. Our core OPEX guidance reflects the typical seasonally higher core OPEX spend in the fourth quarter and includes the planned investments to support the advancement of our late-stage pipeline and pre-launch activities. We also now expect approximately $50 million of acquired IPR&D in the fourth quarter. We will continue to balance this investment, as well as investing to support the commercial success of the growth portfolio while ensuring a keen focus remains on profitability.
Please be sure to review this slide, as well as our press release, for other important full-year 2026 guidance assumptions. In closing, Q3 2026 was another strong quarter and a continuation of the momentum we have seen this year. Our growth portfolio has now exceeded the legacy MS portfolio for multiple consecutive quarters, and the first full quarter of SYFOVRE and EMPAVELI demonstrates the strategic and financial rationale for the Apellis acquisition. As we strengthen our portfolio, we are on track to grow our business next year as we also focus on important data reads from our pipeline to further strengthen our long-term growth potential. With that, I would like to pass the call back to Tim to open us up for questions.
Thanks, Robin. Can we go to our first question, please, Cynthia?
Thank you. If you would like to ask a question, please press star one on your telephone keypad. As a reminder, please limit yourself to one question. If you require any further follow-up, you may press star one again to rejoin the queue. Your first question comes from the line of Phil Nadeau with TD Cowen.
Good morning. Thanks for taking our question and congrats on the solid quarter. We wanted to ask about the upcoming litifilimab data in SLE. I think that is now becoming a focus of investors. Can Biogen discuss its confidence that those phase III trials will succeed and maybe work into that, the differences in the phase III design versus phase II? Thank you.
Priya, you want to take that one?
Sure. Thanks, Phil. I think just stepping back, we recognize and acknowledge lupus is a very heterogeneous disease. We studied past trials and we have extensively put several strategies in place to optimize the outcomes, and I have discussed those in the past. I think just to name a few, the steroid tapering, control of background standard of care meds. I do not really have anything new to add to those strategies. We remain very close now to data readouts, both of them being disclosed in the first half of December. I will just stop there, and we look forward to seeing the data as well.
Thanks, Priya. Let us go to the next question, please.
Your next question comes from the line of Chris Schott with JPMorgan.
Great. Thanks so much. Just a question on felzartamab. I know you mentioned this a bit in the opening remarks, but assuming positive data in AMR, can you talk a little bit about how you are thinking about the rate of market development and the ramp of the product? Again, maybe as you spent more time in this market, just comment maybe a bit on how the Street is modeling this. Do you think the Street is kind of getting this right in terms of how big of an opportunity this could be? Thanks so much.
Hello, Chris. This is Alisha. I'll take your question. We've been spending a lot of time looking at AMR, and I also think we've been looking a lot at MVI as well, which I'll touch on briefly. For AMR, and actually just recently at ASN, the team really spoke to many of the transplant physicians that would potentially be treating patients for this disease. I have to say that they were very enthusiastic about Felz's scientific MOA, and it really was incredibly positive conversations. When you look at AMR, we believe there's around 11,000 patients, and you have to also remember that not all of those patients will go on product. Several of those patients will already be too late in their progression, but there's a very large cohort that will.
Currently, AMR will be treated in transplant centers, and transplant nephs see themselves as stewards of the graft. The interesting thing about the space is we know exactly who will be treating the patients. It's about getting the patients in there. The one thing that we've learned from EMPAVELI, now that EMPAVELI has been working with transplant nephs, is that in a lot of these centers, you have to be on protocol. I mention protocol because protocols can take time, which is why we've already hired a medical team that has already visited 100 transplant centers, and they're already looking at how you get on the protocol as quickly as possible once you have an approval. When you look at the ramp, you're going to have to know a couple of the months out of the gate.
You're going to have some centers that will start right away. You have others that will gradually come on. You're also going to have a bolus of patients that are already sitting in that transplant center. Typically, transplant patients are with the transplant center for approximately one year. They go back to their general nephs. General nephs are actually very good at monitoring for AMR. They're also pretty good at already referring them into the transplant centers. That system, though it's not perfect, is already there. We know that we will already, out of the gate, have a good set of patients at launch, and we're already currently working on the second tranche of patients that you would get after you see that bolus.
When we look at the top 100 centers, like I said, right now it's about educating and understanding the protocols and how quickly we can get on. Then for general nephs, it's around how they consistently diagnose and do surveillance for AMR and ensuring that they refer them earlier versus later. Along with that ramp, obviously we get a lot of questions about price, and you've probably seen what's been happening in the market with IGAN, but we do believe that pricing will reflect the significant value that Felz is going to have for patients. When you think about pricing for the product, also keep in mind the dosing of felzartamab. For example, in AMR, in year one, they will have 12 doses.
In year two, they have 6.5 doses. You are also going to see, like what we saw with SPINRAZA, that first year is where you are going to capture actually quite a bit of value for the patients as they go down to 6.5 doses in the second year. In addition to AMR, you have MVI. Now, we view MVI as incremental to AMR rather than a separate commercial market. Now that we have done more work on it, we can understand that physicians are also looking at MVI. We believe that this gives an additional 30% on top of that patient population of AMR. The biggest opportunity for MVI will be for raising more awareness outside of KOLs.
Right now, KOLs understand it greatly, but it is currently an underappreciated disease that we have some time to work on, but we have already started those conversations.
Thanks very much, Alisha. Can we go to the next one, please?
Your next question comes from the line of Brian Abrahams with RBC Capital Markets.
Hey, good morning. Thanks for taking my question, and congrats on the quarter. Maybe another question for Priya on litifilimab. I know you guys have already presented some of this, but can you elaborate a little bit more on how you view the baseline characteristics of patients who enrolled in TOPAZ-1 and 2 as comparing to the phase II study, in particular with respect to interferon gene signatures? Thanks.
Thanks, Brian. Just stepping back, I think interferon gene signature across the board, we expect it to be high in SLE patients, and that is what the literature supports as well. Really from a baseline perspective, there aren't any differences that we are aware of in terms of LILAC versus TOPAZ-1 and 2 on interferon gene signature. We'll only know afterwards when we look at the data, and this is areas we'll be examining carefully.
Thanks, Priya. Let's go to the next question, please.
Your next question comes from the line of Umer Raffat with Evercore.
Hi, guys. Thanks for taking my question. I wanted to focus on the SLE trial as well. Priya, when I look at the phase II data, one thing that stands out on the SRI4 endpoint is that the entire delta, this entire separation versus placebo, was driven by one subcomponent, which is SLEDAI-2K. Again, I'm sure you're very familiar with that as well. How are you thinking about the relevance of that finding heading into phase III? Do you still expect it to be SLEDAI-2K driving it or additional components as well? Will you be in a position to pool data across both studies by interferon high subgroup if needed? There's other companies in the space commenting on that, even in a scenario where one of the trial does not hit stats.
Yeah. Thanks, Umer. I think just stepping back, I think we believe that SRI4 is the right primary endpoint when we designed the trial, given that our focus is on skin and joints and how it measures outcomes. From that perspective, we think that's right. Yes, I think we will have the opportunity once we see the data to decide how we might pool and what aspects of these trials should be combined. I think this will be data-dependent and also dependent on conversations and discussions with regulators. So we wait to see the data, and of course, we plan ahead of that, but we wait to see the data now.
Go to our next question, please.
Your next question comes from the line of Salveen Richter with Goldman Sachs.
Good morning. Thanks for taking my question. Could you speak to how much of an increase in commercial injections for SYFOVRE is due to reducing free drug use versus demand? Also, with regard to the education campaigns as you look to improving the discontinuation rate, maybe help us understand what is resonating with physicians and patients and where the remaining barriers are. Thank you.
Hi, Salveen. This is Alisha. Thank you for the question. The team has done actually a phenomenal job with lowering the free goods on this product, but that's been throughout ever since we did the acquisition. We identified that as a potential area of improvement before we had even acquired them, and the team has done a nice job of that.
When you look at the commercial injection growth, especially year-over-year, we do tie this to the fact that the SYFOVRE team has also done a very nice job on improving the sentiment on treating GA in general and slowing lesion progression. In fact, I went to one of their large conferences and met with many of the PE firms and with the retina specialists. The sentiment they say across the board has improved quite a bit, and they are now more willing to do more injections. These commercial injections are coming from also more HCPs that are coming on board and more depth of prescribing as well. I have mentioned before that the discons after that first month of injection is quite high. We are just now putting into place a lot of those tactics to try and address that.
I have to say that the biggest problem is this. When I talk to a physician or we do patient market research, patients aren't really explained what to expect when they get the injection. If you compare it to wet AMD, which by the way, 40% of GA patients also have wet AMD, they're expecting everything to clear right away. They don't understand the slowing of progression. So when they get the injection, they feel like, "Oh, that doesn't work." They don't come back. There's an educational piece there that we're putting into place, not only for patients, but even for office staff, and also really talking to the physicians. When you talk to the retina specialists, they don't actually realize that these patients have dropped off at month one.
I do think once the education goes into place, we are going to see quite a nice lift on that when they start educating the patients. The other part of that is going to be around, I've mentioned this before. Now that we had a very strong quarter and not only grew in revenue but also grew in the volume, we believe DTC is going to be a great strategic lever. We noticed that because they ran DTC a while ago for SYFOVRE. Actually, the results of it was very good. You saw a direct impact into patients going in and requesting the product. Then for whatever reason, they of course stopped it. Now that they are in Biogen, we've decided to kick that back up again. We already have a concept. We shared it with Chris.
We think it will be a very good DTC ad, and we hope to launch that next year. We do believe we will drive even more patients into doctor's offices.
Thanks, Alisha. Let's go to the next question, please.
Your next question comes from the line of Michael Yee with UBS.
Great, thank you. Maybe just a question on the cutaneous lupus readout in the first half. Maybe you could just comment, Priya or Chris, on your confidence in that indication and that program versus the systemic indications, which I think people would view as a little bit higher risk. In thinking about either the target, which is different than dapirolizumab, for example, and just your overall confidence in that study. I know you are appreciating your running one study here versus systemic two studies. Just wanted to think about how you are framing the cutaneous readout. Thank you.
Yep. Thanks, Michael. I think just stepping back, we believe that both SLE and CLE are high unmet need areas. We also think that the mechanism of action, as we saw from LILAC in phase II, we see that the drug has activity in both forms of the disease. I think just stepping back, it is too close really now, and I do not want to speculate, so I am not going to really talk about confidence. We know that systemic lupus is generally more heterogeneous. So I think that is the area that I spoke about earlier, as well as to what are the strategies we put in to really address the variability that we see. Moving to cutaneous lupus, this is obviously a visible condition. It is easier to kind of visualize and see impact. So I will just stop there.
But I think overall, we believe both are important high unmet needs, and we are going to see data in both these indications. And we have seen data in phase II, so we will wait to see what we get in phase III.
Thanks, Priya. Let us go to the next one, please.
Your next question comes from the line of Alex Hammond with Wolfe Research.
Thanks for taking the question. For SPINRAZA high dose, can you characterize what levels of conversion you have seen in the U.S.? At steady state, where do you expect this to fall? As a follow-up, too, does it give you confidence on the commercial dynamics for salanersen, assuming a positive phase III result, I think at 28? Thank you.
Thank you. Alex, this is Alisha. We are really pleased with the performance of SPINRAZA high dose. In fact, for anyone that looks at the rare disease launch benchmarks, SPINRAZA 12 mg used to be the benchmark for the best rare disease launch ever, and now it is actually SPINRAZA high dose. We do believe this has now set a new bar also for efficacy. The one thing about this community that is so special is, number one, they know every trial that is coming out. They know every physician. When they want something, they ask for it. A lot of what you are seeing with SPINRAZA high dose is really coming from the community pulling it and asking doctors for it. Not just in the U.S., by the way.
I want to say both of the other regions, both Europe and ex-U.S. and Europe, we are seeing similar results across the board with SPINRAZA high dose. All of the launches across the board have been successful. If you look at our start forms, which is basically the intent to get the prescription for the patient, at the end of Q3, 70% of the 12 mg patients now have a start form submitted, which is very high. We know that 50% have now been dosed the product. That means that they have pulled forward quite a few of these patients. Clearly, we are not in Q4 yet, but as you can imagine, even more of those patients will now land in Q4.
That means for next year, there are not as many patients that will be getting that one-time benefit of the $90,000 that you are seeing this year with every transition dose. The other thing that we are seeing, and this is also across all regions, is that you are seeing patients come back. They have been on SPINRAZA. They went to a competitor. Then we call that a switchback. We have seen a portion of patients switching back. We have also seen a portion of patients either being dosed right before their ZOLGENSMA or after ZOLGENSMA. There is a market there that we will be looking at next year on switchbacks and on new patients that will go beyond the transitions. With that being said, what is our goal with SPINRAZA high dose?
It is to maintain the patients that we currently have, especially as we approach a potential launch of salanersen, which I have to say, the community already knows about salanersen and patients are already asking about it. So we also believe that that will be a very large commercial opportunity for us if we do get an approval for it.
Let us go to our next question, please.
Your next question comes from the line of Paul Matteis with Stifel.
Hey, great. Thanks so much for taking my question. I wanted to throw one in on zorevunersen ahead of data next year. Can you talk about the work you have done to garner conviction in pricing that drug at a premium outside of the U.S. where antiepileptic medicines are generally not that expensive? As it relates to the thesis there, how core to that thesis is actually showing a statistic effect on cognition in the phase III Dravet study? Thanks so much.
Yeah, Paul, I think there is an opportunity to reprice this market. The real differentiation is the impact on cognition, as you said. I think we've already talked about that this is an addressable market of at least $1 billion outside the U.S., and obviously we need to see the phase III results, but I think if they replicate the phase II, then I do think we have a pretty compelling proposition to take to payers in Europe.
Chris, let's go to the next question, please, Cynthia.
Your next question comes from the line of Evan Seigerman with BMO Capital Markets.
Hi, guys. Thank you so much for taking my question, and always congrats on the really nice progress. I want to touch on LEQEMBI and LEQEMBI IQLIK just given the growth we're seeing there. In the field, what's the feedback from both patients and providers regarding IQLIK? Is it driving the uptake that you would hope it would have? Then thinking ahead to next year, what else can you do to expand the market and continue the growth? Thank you so much.
Okay. Thank you, Evan. This is Alisha. Very excited that you asked about LEQEMBI IQLIK. I think first I would like to address, if you do not mind, Part D, because those are the questions we had quite a bit over the last couple quarters. If you have been able to look at the published formularies already, you are going to see that Part D, as Robin had also mentioned, we have at least 50% coverage. Which I have to say, during this time, especially post IRA, Part D plans have been quite restrictive. So we are very pleased with where we are with Part D. Also keep in mind it is an open enrollment right now, so I cannot actually tell you the total lives because 30% are still in flux.
Even though we know of 50% now, we do believe that we will have greater than 50% going into January of next year, which is better than what we had expected to have for next year. So that is very good news. Now when you look at how IQLIK is performing, I think that what you are going to see is it is really reframing the convenience conversation. This is actually a critical moment for LEQEMBI to become more accessible and easier to start for patients. In the longer term, which we have said before, we believe IQLIK is one of the only things that we have that will actually grow the market in general for the entire class. Now if you look at DDD data, which I know many of you buy, it does not have a great capture rate.
It is going to show really astronomical numbers for how they capture it. I would say do not look at IQLIK for the DDD data. But when you do look at how it is performing in market, and you compare it to, let us say, the LEQEMBI IV launch or KISUNLA, IQLIK is outpacing the LEQEMBI IV launch by 3.5 and KISUNLA by six times. Now, these are early days, and so you are going to see that some of that is going to be orders going into certain IDNs and maybe some bolus of patients.
However, the interesting thing that we are seeing that we have not seen before, IQLIK, of course, the majority you are going to see come from LEQEMBI writers and also dual writers. But we are now seeing writers who have never written an AAT before, never written KISUNLA, never wrote LEQEMBI IV. They are writing IQLIK.
We are also seeing physicians who have only ever written KISUNLA write IQLIK. So you are starting to see a dynamic change, especially in areas where there is long drive times. For example, the fastest uptake that we have is on the West Coast, where you are seeing really a lot of space and geography, and you are also seeing the convenience factor happen as well. With that being said, I think that this year, right now, it is outpacing what our plans were. It is early days.
As you look at next year, I think that we are going to see that subQ has now become a really tremendous option for both patients and physicians. For physicians to write it that have never written an AAT before is a very good signal to us that this can be very promising for next year and the years beyond.
Thanks, Alisha. Can we go to the next question, please?
Your next question comes from the line of Geoff Meacham with Citi.
Morning, guys. Thanks for the question. Bigger picture one for Chris. Looks like the return to top-line growth is durable. Lots of interest in the pipeline. I guess the question is, when you think about capital deployment, what would you prioritize? Is it further expanding felzartamab development, for example, more commercial investments in SYFOVRE or EMPAVELI, or is it staying aggressive in BD? Just want to get kind of the internal to external balance from you looking forward. Thank you.
Yeah, thanks. Well, there's no question that obviously we have to wait till the clinical trial results, but we are looking at these 10 phase III launches. There's five NME launches. Part of the rationale, remember, for acquiring Apellis was already to acquire a commercial team for felzartamab. That doesn't mean we wouldn't want to expand that further, but it's not going to be a we're starting from scratch type investment in that space. Lupus, I would suspect, is going to need a lot of investment, a lot of education. Zorevunersen, I think is really a limited population that's going to look a lot more like a rare disease. Salanersen also comes in behind the SPINRAZA. So as we grow the business, I think our objective is clearly to invest not only in commercial but a continued investment in R&D.
But equally, I think investors have waited a long time for us to grow, so we're going to be very mindful of different ratios and the amount of investment versus growing our bottom line. But I think we can manage all of that, actually. So we will invest in our continued success for sure. In terms of external, as I was saying earlier, I think we're really focused on the early stage. This is the most capital-efficient time to introduce new assets to a company. I really always hated having to go buy assets in later stage because there's still a fair amount of risk associated with that. And I think if we have reasonable success with the pipeline, again, we have to wait and see the results, but there's a good potential that the company can just grow now for the foreseeable future.
So that's why we're focused on really growth into the next decade. And there we have the time to grow the assets, so we're looking a lot at DC to phase I-B, I would say is probably our sweet spot. We've been fairly intentional about M&A over the last three years. We have looked at everything and filtered through everything. We're not being as intentional now, but we can still be opportunistic if we see something that would add to one of our existing franchises. One of the things I'm quite mindful of is distraction. We're dramatically changing Biogen. Four years ago, we really only called on neurologists. And now our regional teams are looking at retina specialists, nephrologists, transplant nephrologists. With lupus, we're looking at dermatologists and rheumatologists. We're looking at potentially epileptologists with zorevunersen. So we really expanded the whole commercial organization.
We are busy recruiting an awful lot of capability. Out of the top 150 executives in the company, about half have joined in the last three years. So all of that is a tremendous amount of change, and I think we really want to be able to digest that change and really take advantage of the opportunities that are in front of us and be careful about overextending ourselves. So that's how I'm thinking about it.
Let's go to our next question.
Your next question comes from the line of David Amsellem with Piper Sandler.
Thanks. I wanted to ask a commercialization question on litifilimab, and I realize I might be putting the cart before the horse here given the data readouts. But I wanted to get your thoughts on how you're sizing the CLE opportunity relative to the SLE opportunity, bearing in mind that many patients with cutaneous disease have systemic disease, although there's no therapies approved for cutaneous disease, or there's a dearth of treatment options, of course, there. So how are you thinking about sizing in terms of the two opportunities, and how distinct do you look at these two opportunities? Thank you.
Hi, thank you. This is Alisha. I think first of all, the way in which we view these is they are separate opportunities. If you look at CLE, there's 250,000 patients that have CLE only, where when you look at SLE, there's 300,000 patients that have SLE only. There's 50,000 patients that have both. So CLE in total is 300,000 patients. When you also look at CLE, the way the team has phrased it is CLE is life-changing for a patient. In SLE, it is life-ending. That means that they are very different markets. In CLE, less than 5% are actually treated, which is different than SLE, which you know is around 30%.
There is a split across rheumatology and dermatology, with only 1/3 of these patients being managed by dermatology. And what ends up happening with the patients is that specialists will refer to each other.
The patients then get left waiting while the damage continues to go because they sort of get stuck in the middle. If you talk to a physician for CLE, what they want to happen for a product, if they were to prescribe, because right now they don't prescribe the biologics for this disease, they really want to make sure the drug works, it's safe, and fairly easy to use. They don't want a lot of monitoring, and they want to be able to access it very quickly, which means patient services becomes quite important in this disease state. The patient goal is they just want some sort of visible improvement. So this will be before they have a permanent scarring, before they have hair loss, or before there is really a major disfigurement, especially of their face.
So in this area, our push is more to get the dermatologist to treat where, with SLE, rheumatologists are already treating. We want to make sure dermatologists have the empowerment and that they treat early and urgent. We need to simplify this diagnosis for them so that patients aren't experiencing any of these horrible irreversible damage that they talk about so much. Then accelerate the adoption of the higher efficacy treatment. So what we don't want to see in dermatology, like what you see in rheumatology, is them waiting.
We believe because derms already prescribe biologics in other parts of their business, that they will end up picking up these products at a fairly good clip once they understand how they work, how to access them, and once we're on formulary. We do look at it a little bit differently than we look at SLE.
Thanks, Alisha. Let's go to the next question, please.
Your next question comes from the line of Danielle Brill with Truist Securities.
Hi, guys. Good morning. Thanks so much for the question. Maybe I'll actually ask one on IgAN. With the FDA now open to a one-year eGFR endpoint and the APRIL BAFF agents becoming the standard of care, are you reconsidering PREVAIL design, including the two years on placebo? Then if you do shift to a one-year eGFR endpoint, would the trial still be adequately powered? Thank you.
Thank you, Danielle. Just stepping back, I think we have assessed that while proteinuria remains a very relevant marker of disease activity, as well as UPCR, eGFR really provides a more clinically meaningful measure of long-term renal outcomes. We are actually planning to stay current and ahead by updating our primary endpoint to eGFR to reflect the evolving evidence base and the increasing importance of directly assessing kidney function in IGAN. We are already embarking on this change. We think that the change is going to align the program with the current treatment landscape as well as regulatory expectations and will allow us to more clearly characterize the potential benefit of felzartamab.
In addition, I would say that we continue to hear and get reinforcement on the fact that the drug holiday and ability for patients to be off drug while staying in remission is very important.
This continues to be a very important differentiator for felzartamab in IGAN. We will continue to keep both those aspects in mind as we reflect these updates. Thank you.
Thanks, Priya. Let's go to the next question, please, Cynthia.
Your next question comes from the line of Mohit Bansal with Wells Fargo.
Great. Thank you very much for taking my question, and congrats on all the progress. Just trying to understand the guidance a little bit here. If I do a plain math of 5% growth, assuming that's what you mean by mid-single-digit growth, and subtract the first nine months of sales, it seems like you are modeling quite a lot of drop sequentially in fourth quarter versus third quarter. I get about $30 million is dropping, but what are we missing? Because it seems like a lot of drop from third quarter to fourth quarter. I would love to understand how you are thinking about it.
Yes. Thank you for the question. When you look at the Q3 results, as I noted in my remarks, on a top-line basis, we noted that we did have this significant tailwind, as Alisha pointed out, with the conversion rate on SPIN HD. We saw a pull forward of conversions that we expected to occur in Q4 to the Q3 timeframe, as well as some of the inventory dynamics I mentioned as it related to SKYCLARYS and some of our other products. From a top-line perspective, we had this positive pull forward. The guidance update and where we've landed is a factor. You might recall in the last earnings call, we did raise our guidance.
In the current quarter, we're lifting the lower -end of the guidance range, and that's driven primarily by the Apellis integration and the success we've had there, both the top-line performance as well as the earlier capture of the synergies on the expense side.
Thanks, Robin. Let's go to the next question, please.
Your next question comes from the line of Andrew Tsai with Jefferies.
Hey, good morning. Thank you. On SLE, if litifilimab and DAPI both succeeded, can you remind us how these two drugs would be positioned relative to each other as well as the competing drugs out there? What would be the reasons to believe why either drug could be used as a first-line therapy ahead of standard of care? Thank you.
Hi, thank you. This is Alisha, and I'll take that answer. We're working on positioning right now for both of these products, especially if we are fortunate to have both of them be approved, which by the way, gives us two shots on goal for SLE, which we also find critically important. We also believe that they may offer some differentiation. For example, we do know that DAPI has shown improvement in fatigue, and we know one of the major complaints from SLE patients is fatigue.
When it comes to first line, in SLE, there's going to be a lot of competitors, but depending on how the data reads out, I believe that the way that you will have a success in lupus, it will be directly correlated to how you address the barriers that these physicians and patients are going up against. It will also be data dependent. However, what the current organizations have not been able to do is actually address barriers on why they're waiting, as Chris mentioned, waiting on prescribing products. The patients haven't been activated to go in and ask for these products.
I also think with the commercial powerhouse that Biogen has been able to create over the last seven years with all of the seven launches that we've had, we also believe that the commercialization, how you market the product, will become just as important.
It remains to be seen, but with two shots on goal, I think we're going to be able to compete to win pretty well.
Here again, I think Biogen has a lot of experience. We've had multiple products in the MS portfolio, for instance, and have been able to find exactly which patient benefits from which product at the right time. I think that will transfer to lupus as well if we are fortunate enough to have both of those products.
Great. Thanks, Chris. Let's go to our last question, please.
Your last question comes from the line of Marc Goodman with Leerink Partners.
Yes, good morning. Heard your comment on inventory with SKYCLARYS, but could you just give us a little more detail just on what you meant by growth? How much growth are we seeing in patients in the U.S.? Just give us a little bit of the dynamic going on overseas because it's kind of country -by -country and what's come on and what's still to come on, what's growing, what's been reimbursed. Just give us a little more detail there. Thanks.
Hi, thank you. This is Alisha Alaimo. I will take the first part of the question, especially around the U.S. We are encouraged by our 2026 performance with SKYCLARYS, especially as we continue to grow year-over-year. We do believe we will continue that growth moving forward. There are a couple dynamics at play, especially in our organization. I think first and foremost, the patient-finding tools that we have now and the AI predicting where these patients are and the way in which the teams collaborate to find them has really gotten to a level, I think, of one of the most efficient models that I have seen.
They have done a very good job of finding those patients and getting them on product. The other thing that the team has done very well is in the beginning, we had a very high discount rate off of SKYCLARYS.
That has now normalized at a much lower percentage than what we have had before, and we are seeing the discounts continue to stay flat as we move through the rest of the year. So we believe that we will continue to grow year-over-year, but more importantly, the pediatric expansion represents the next meaningful opportunity for us for a growth inflection as we look ahead.
This is Robin, and I will speak to the ex-U.S. dynamics. We expect from a demand perspective that the growth, both the remainder of this year and into next year, is primarily going to be coming from the continued expansion of SKYCLARYS globally. We continue to launch in new jurisdictions, including the recent approval in Brazil. That is where the future growth from a demand perspective is focused on.
Great. Thanks, Robin. Thanks, everybody, for your participation today. If you have got more questions, just reach out to us at the IR team here at Biogen. Thank you.
This concludes today's call. Thank you for your participation. You may now disconnect.