Awesome. Thank you very much. Thank you everyone for joining us today. Session two for me. We have Biogen management team with us today. We have Robin Kramer, the Chief Financial Officer of the company, and we also are joined by Adam Keeney, the Head of Corporate Development of the company. Thank you very much for joining us today.
Thank you for having us.
Great. I think I'm hosting you for the first time at the Wells Fargo conference. Again, thank you very much, you and Tim, and the other team for making it happen. Robin, it has been one and a half years for you as the CFO.
It has.
Of the company, and a lot has changed at Biogen in those 18 months. From your lenses, where do you think Biogen has done really well in those 18 months or so? Where do you think that you see the room for improvement, as there is always room for improvement?
Thanks for the question. It's actually been an incredibly exciting time to be the CFO at Biogen. I've been at the company now almost eight years.
But in the CFO role, just over a year and a half. It's really been an exciting time under Chris's leadership. I think he was very clear from the get-go on what the strategic focus for the company was and really diversification of Biogen and its portfolio. But also returning the company to growth. When I look at the really significant progress we've made on a number of fronts, the first would be the launch of the growth products and the key products there. We've really had an opportunity to launch those effectively and help to offset the erosion in the MS portfolio.
Right.
Really putting the base business in a really good spot. Also looking at the pipeline and looking at diversification of the pipeline beyond the neurology area and really broadening that and execution of transactions that supported that, like HI-Bio and the felzartamab assets. Then really taking that updated and revised pipeline and pulling programs into phase III. We now have 10 phase III programs, and those begin reading out here in the fourth quarter. Really the pipeline is at a pivotal point for us from a growth perspective. Really deploying capital and things like the Apellis acquisition, which has the opportunity to have near-term growth, both top and bottom line, while we wait for the pipeline products to launch and contribute to the long-term trajectory of the company.
In midst of all of that, we really continue to be focused on managing the OpEx, making sure we're also delivering growth on the bottom line. That's a bit of a tricky thing when you're investing in the launch products, but also deploying capital into the pipeline. That continues to be an area of focus for us.
Got it. I think I just go back to January of 2024, where Chris laid out that for a product revenue base of about $8 billion, our expense base is a little bit higher than what it should be. It kind of coincided with you being the CFO of the company as well.
Yeah
For both of you, this question is that you did trim some pipeline, you prioritized some assets there. What was the philosophy behind, what is the guiding principle there that these are the assets you will take forward versus these are the assets you'll churn here?
Yeah. I had the opportunity to lead the project around the Fit for Growth initiative, which was our initiative to look at the cost base and infrastructure, to make sure that we were taking a prudent approach to optimizing that. Also we were at a pivotal time where we needed to redeploy investments from the MS portfolio to the four launch products, including LEQEMBI, SKYCLARYS, ZURZUVAE. The process of doing that was very much a holistic contribution by everyone in the organization to make that pivot. It was necessary in order to have the capital to put towards deploying towards the launch products. From a philosophical standpoint, being very disciplined in thinking about capital allocation has been a strong suit coming out of the Fit for Growth.
Making sure that from an R&D portfolio perspective, that we were investing in those assets that we had the highest conviction on.
Right.
And really making sure that we are advancing those 10 phase III programs where we are really focused on making sure that we are bringing those to market and that they are set up for the highest level of success.
Got it. There is another thing which I have noticed, that it was like an over-indexed company to neuro to now you are more I&I and all that. That is also part of that, just to manage the overall riskiness of the business probably.
Yeah. Chris, really from the get-go, was looking for making sure that we were diversifying the pipeline beyond neurology, and having these high-risk, high-reward bets as it relates to progression of assets in the pipeline. Diversifying in areas where we believe we have a right to play rare immunology. Maybe I will hand it to Adam because he has been the architect behind finding these wonderful assets for us to put into the pipeline and to put us on that trajectory.
Thank you. Chris joined Biogen just over three and a half years ago.
Yeah.
I joined about six months after that. One of the early conversations was how do we diversify outside of neurology. Historically, Biogen had taken the hardest path possible.
Right
Trying to find first-in-class, unvalidated biology in new spaces without any clinical or regulatory precedent to really build de novo brand new markets.
Yeah.
We said to ourself, "Well, we can do that in some instances, in certain areas, but we can't do that across the portfolio." We were very intentional to look for opportunities that were in areas that we had conviction from a data standpoint, but where the endpoints were validated, where the phase II studies were approachable, where the phase III designs were understood, where the endpoints were clear, and where you had a faster opportunity to get to a commercial product. If you take nephrology as an area now, this has been an emerging area of interest in the last 10 years due to the fact that you can use proteinuria as a validated surrogate, but eGFR is a very well-recognized full approval endpoint.
With the HI-Bio acquisition, bought as felzartamab, that was our entrance into nephrology, but the overall risk profile there is very different, and then we leveraged that opportunity across four indications within nephrology. You can see that there is a pipeline in the product there that has a very different risk profile, different investment profile compared to an Alzheimer's project, for example.
Got it. Glad that you mentioned felzartamab HI-Bio drug. Investors do see multiple indications there, AMR, IgAN, and all that. But because the uncertainty around duration and whatnot, they are struggling to understand the size of all these opportunities. If you had to rank AMR to IgAN and all that, IgAN is a little bit more competitive and membranous nephropathy is there. How would you rank them? How would you think about this overall size of these markets here?
I think we think of AMR as the foundational opportunity for felzartamab. AMR currently, antibody-mediated rejection of kidney transplantations, has no approved therapeutics. There are 11,000 patients in the U.S. that have secondary rejections for their transplantation. It is a very, very significant healthcare burden. We see felzartamab in AMR both as the first data readout, but also as the opportunity to expand from there. If you look at the overall pricing dynamics in nephrology space, they are actually seeing very robust pricing. We are able to actually anchor felzartamab at a high price into a well-defined, high unmet need indication.
That data will replicate the phase II data that was really transformational in terms of the ability to save the grafts and save the transplants. A really unique opportunity. From there, we can expand into IgAN, PMN, MN, and there we can leverage, again, the regulatory and clinical expertise and knowledge that has been built over the last few years to give us a differentiated value proposition.
We see this as a unique opportunity where you can have a course of therapy, reset the immune system, that then provides a durable response. We think that that actually, in IgAN, for example, which is younger patients, that is an attractive profile where you have your administration, then you have a drug holiday, you track disease, and only redose if disease recurs. We think that is an interesting value proposition that is differentiated. Then felzartamab with CD38 has the opportunity to explore non-nephrology indications, and we have launched two additional proof of concept studies in phase II. We see really a broad scope exploring not only nephrology, but also CD38 as a mechanism for autoantibody-driven diseases. We see a lot of value there and a lot of longevity in terms of the franchise that can be built behind that product.
Which two indications are those?
We have not disclosed those just yet.
Okay. Got it. Yeah. Got it.
And one of the exciting things about that transaction is that we took a different approach there, and the approach being to leave the team in place, create the opportunity to have a West Coast hub.
And to make sure that we were creating an environment where they could continue to accelerate these potential additional indications into the clinic.
Right.
And so it's been quite productive, even since the point where we did the acquisition on advancing the programs into phase III. So the ones that are in phase III now all advanced in the time since we've actually acquired the company, and then the moving of the additional indications into the clinic. So leaving them in place, agile.
Executing on the work that they're doing in order to try and get to the clinic and to market as quickly as possible.
Got it. Very helpful. One question I have is that, when I look at your P&L for next five years, I mean projections and all, OCREVUS royalties still contribute a meaningful portion of the profits right now. There is a step-down coming once the first biosimilar launches. But before that step down, you have multiple cards turning over from the pipeline side, saracatinib launch, HD, SPINRAZA, and all that. When you think about 2028- 2030 timeframe, when all these launches are happening, what factors do you think would be more important for us to understand whether you could grow through this? It is not a patent cliff in a traditional sense, but it is kind of a cliff on the P&L. How would you make us think about that?
First, I would focus on the full breadth of the Roche Genentech relationship.
Right.
We have the right. We have our royalty associated with OCREVUS, so I will touch on that one first. They recently launched the subcutaneous
Right
Version of OCREVUS, and they have had quite good traction on that. If you think about the timeframe around when folks are thinking about this or trying to project that, we are going to be at a higher level, given the subcutaneous and the transaction there of the exit at the point of the entry of the biosimilar. So exiting dollar revenue ramp. In addition, through the profit share, we have rights in RITUXAN and GAZYVA.
Right.
GAZYVA, actually, they have had the approval, both in the U.S. and the E.U., as it relates to lupus nephritis this year. So we have a launch product happening there. So as the OCREVUS, it will still be in that launch phase and not at peak revenue at the time that we hit the endpoint at the point of the step-down on the OCREVUS. Then I would say, the work that we have been talking about having done over the course of the last three years has diversified our revenue portfolio.
Some of this diversification or investment has been in growth products that we had in the portfolio, like HD for SPINRAZA, which we are having really great infiltration of that across the patient population. So that is off to a really great start. So even in the products that have been in the portfolio for a bit, we still have opportunities as it relates to that. Then across TYSABRI, we have had good resiliency there, which has been important.
Then very importantly, the transaction that we did with Apellis added two additional commercial products to our portfolio and increased diversification top line as well. So the breadth of our product offering in commercial products is quite different than it was two or three years ago.
Got it. Completely makes sense. Why do not you talk about Apellis deal as well here. So investors are still not fully convinced about the durability of SYFOVRE asset. They understand the C3G asset a little bit more and the durability there, but SYFOVRE, they are still digesting the durability part of it. So what could we learn in next 12 months in terms of discontinuations, persistency, and all those aspects that will help us get more comfort around this?
Yes. If we just think about the geographic atrophy market, it is a very large market.
Right
But very under-penetrated.
Both products actually have the opportunity to really add new patients, and I think that is the key to activating physicians and patients around the urgency to treat and the need to intervene early and maintain treatment. We are looking at both adding new patients, and we are considering DTC and other campaigns to improve awareness of the need to treat GA, the availability of effective therapeutics.
But then once patients are on treatment, maintaining the treatment is a critical factor. Because this is a treatment that you do not see an immediate visual benefit, you have got to continue to educate the patient for the need to be retreated. We are doing a lot of work commercially around how do we ensure persistency. I think new patient starts and persistency are critical, but the opportunity to grow SYFOVRE, but also the space, is very considerable given the large number of patients that are available in the U.S.
There's a very significant opportunity for growth, but it's really about bringing new patients in and maintaining treatment for those patients that are on therapy.
Got it. Very helpful. Then the financial side of the question here is that you did talk about at least $250 million of revenue synergies by the end of 2027. How much of that is already logged in versus dependent on execution? Then what would make the numbers to move higher or lower here?
Yeah. As it relates to 2026, it will be dilutive in 2026, but we've already implemented some of the cost actions, and largely the dilution is being driven by the interest expense. From an operating margin perspective, we've already done some rightsizing there. As we exit the end of the year, most of the actions will have taken place. We'll still be doing some system-type integration activities through the middle part of next year. As you noted, what we've indicated is that exiting next year, annualized savings are expected to be roughly $250 million. That is largely being driven by R&D and G&A. As we've said, one of the strategic elements of the Apellis acquisition was bringing on the medical and commercial nephrology expertise in anticipation of the felzartamab AMR launch. The sales and medical organizations are essentially being left intact.
Our optimization activities are really in that R&D and G&A area.
Got it. Very helpful. You did mention TYSABRI a little bit at the beginning.
It has performed very well compared to what we were thinking in the face of competition from biosimilars and all. What are the reasons why it has been more resilient than everyone expected, and how should we think about the durability of this franchise going forward?
Yes. The biosimilar essentially entered in-
Right
the first quarter. TYSABRI has, for the quarters in 2026, really done very well as far as exhibiting resiliency. We put that into a couple of reasons. The first is that TYSABRI is very well respected by neurologists and the patient community.
We have longstanding relationships in regards to that, supported by our patient services organization, which is, we think, part of our special sauce.
Right.
The team of folks that are part of that patient services organization really have a high-touch relationship with both patients and HCPs, and longstanding relationships from the point that the patients come onto TYSABRI from a therapeutic perspective. In addition, TYSABRI is supported by the JCV assay, which we have patent protection on and is an FDA-approved assay. Given the potential side effects in PML, the fact that we have that assay is also, we think, contributing to the resiliency that we're seeing in TYSABRI. Ex U.S., we have the subcutaneous offering, so when you look to Europe, part of what is creating the resiliency ex U.S. is also that subcutaneous administration.
Got it. That makes sense. Your growth portfolio is actually becoming a bigger part of your story now. I think there the question is more about whether you're because this is always the case, not just Biogen specifically, it's the case with every company, that the legacy products always have higher margin versus the growth portfolio. Especially in the case of LEQEMBI and all. Talk to us a little bit about how do you think about the margin profile of the growth business versus the legacy portfolio, and then how do you think it could evolve over time?
Yeah. You're right. Exiting 2025, and actually for most of the quarters in 2025, the growth portfolio was able to more than offset the erosion that was in the legacy MS portfolio.
Yeah.
We had very exciting results in Q2 where you could see the growth portfolio, even excluding the two products from Apellis, exceeded the legacy MS portfolio.
We're excited to have that diversification there. From a margin perspective, they're still high-margin products, in large part because of the areas that we play and the fact that we are generally in areas where it's rare, we're seeking to meet an unmet need. Even beyond the U.S., your pricing ex U.S. tends to be closer in parameter to the U.S. pricing, just because of the nature of the areas we play in. Some of those growth products, when you look at the commercial infrastructure that's necessary to support them, it's a little bit more agile and lean
Right
Than the commercial investments that you had to make in the neurology or MS. Some of it has to do with getting below the margin line, because largely what you're talking about is getting to the margin line.
Right.
The fact that you can have a sales and medical base that is more agile. Again, part of the reason that the Apellis transaction was a good transaction for us is helping to be able to leverage that infrastructure as we enter into new spaces with SYFOVRE. We look for optimization in how we are diversifying our therapeutic areas. But also, as we think about the areas that we have started to play in, they tend to have a lighter touch on the sales and medical efforts.
Got it. Completely makes sense. I do want to talk about the SMA franchise here. You seem to have turned a leaf there with HD. Even before we get to HD, I think SPINRAZA's decline has been arrested a little bit i n the last few years. Now HD, you are saying that you are also taking some share from some of the orals out there. Talk to us a little bit about, before we get to selinexor, and do you think HD could make it a stable franchise, or how do you envision it?
Yeah. We have been very excited with the rapid nature by which the patients have been switching from the low dose to the high dose. When you sort of peel back and you talk to the folks on the R&D and our development side, it was a patient-driven expansion into HD, and the patients were asking for more.
Right.
So we put in place the study to be able to see whether a high dose option would be appropriate. So I think you had the healthcare community and the patients seeking to have SPINRAZA with a higher dose. We do think that SPINRAZA is viewed very favorably from an efficacy standpoint. I think seeing the rapid nature of the switch over to high dose is a good indication. That is happening both in the U.S. and in the EU. The nice part of that is it gives us an opportunity to have a bridge to selinexor.
Right.
So you are right, it has stabilized. The patient volumes have stabilized over the last year or two. What we are starting to see is some level of switching, a little too early to tell the degree to which we might see more sort of pediatric cases, because for the most part, those were going the gene therapy route. But we are starting to see those, and we are starting to see some switchbacks. So that will be something that we monitor, but we think there is an opportunity there.
Got it. Can you talk a little bit about the port device that is in development right now?
Yes.
How does this help in terms of? I think you are developing it for SMA first, and then eventually maybe in Alzheimer's also.
Yeah.
Can you talk a little bit about that?
You want to cover the port device?
Sure. Yes, we have been in collaboration with a company called Alcyone for some time.
We went ahead and acquired the company last year. As you know, the SMA market, SPINRAZA is a once a quarterly intrathecal administration, but the device is actually implanted so that it is an indwelling catheter that stays in the spinal canal.
Then there is a port that comes up to the side.
Right.
You just can inject SPINRAZA directly into the port. You do not have to do the,
Spinal tap every time.
The spinal tap every time. For certain patients, I think that's going to offer a very significant benefit, and that allows us to maintain longevity and make sure that we're reducing the barriers to use SPINRAZA from an administration standpoint. That also has opportunity, though, as you think about other intrathecal administered ASOs. We have a collaboration with Stoke, for example, and Dravet. We have BIIB080 from an Alzheimer's perspective, and we have other preclinical assets as well as saquinavir. We think that having an optionality around the device just provides a lot of flexibility and opportunity for certain patients
To choose their preference when they're thinking about administering of different therapeutics. We do believe that efficacy drives choice.
Yep. Right.
But then if you can remove or reduce the barriers to treatment, that I think is going to be an effective strategy.
Got it.
Yeah. The nice thing about saquinavir that we're excited to explore is that that would be a once yearly.
It does look like a better drug as well. How do you think
Yeah
About saquinavir's profile here?
We were very excited about the results and excited to be putting that into phase III. From serving the unmet need, we think we're very excited about the advancing of it.
Got it. You are really going big in nephrology right now. Now that I have you, Adam, here, can you walk through the thought process behind going deeper in nephrology, not just for felzartamab, but again, you are in lupus nephritis, and then a bunch of lupus assets. They're not nephritis per se, but again, just talk a little bit about lupus.
Yeah. Again, I think three years ago we set out on a plan to diversify the company, have a different type of R&D risk.
We were looking at areas where we could get comfortable with phase II proof of concepts that had reasonable reproducibility to phase III in spaces that still had very significant unmet need.
Right.
But where the path to approval was clear, the endpoints were validated, the clinical trials were approachable from a size, length of time. If you think about nephrology, that ticks a number of those criteria. We do see end-stage renal disease is a very significant burden. Transplantation, kidney transplantation is a very significant healthcare issue. If we can find opportunities where we can bend the curve in terms of renal preservation, we think that that's a very important value proposition, not only in the U.S. but outside the U.S. Then it comes down to what are the assets that you can get excited by. We think that CD38 is a differentiated mechanism and value proposition, and then it gets to where do you position those in different indications. Nephrology, again, is a series of smaller rare diseases.
Right.
We started with AMR, IgAN, PMN, MN. With EMPAVELI, we're also exploring not only C3G, but also FSGS.
Right.
These are indications all within nephrology. There's a lot of commercial synergy there because you can basically set your relationship, your sales force, your medical to the nephrologists and the transplant centers, which are very well defined commercially, approachable in terms of the number of nephrologists. But then you can have multiple products for different diseases within that specialty. There's a lot of efficiency there. With HI-Bio initially, but then with Apellis, we are really building out a franchise in nephrology. We continue to be active externally
Right
Looking at additional investments and early-stage assets in nephrology, and we continue to be excited by the opportunity there from a scientific standpoint.
Sorry, mate. Sorry.
Lupus is another example where we've been able to diversify outside of neurology. Litifilimab is actually a homegrown Biogen asset and now on the brink of readout in both SLE and CLE that we're very excited by. Then we have a collaboration with UCB on dapirolizumab that again, allows us to really build out a lot of internal expertise in that space, not only clinically, but now hopefully commercially.
Got it. If Biogen does more BD, what would be the gating factor now? Because you're just out of the Apellis deal. Is it therapeutic area? Is it the size of the deal? How would you think about it?
Well, I do think that we're very excited by the near-term growth prospects for the existing portfolio that we have in terms of commercial products, but also the new pipeline readouts. I think our attention through this year and into 2027 will be more early stage.
I think our stated areas of immunology, rare disease, neurology will be maintained. I do think we're interested to establish franchises now, but we have rheumatology, dermatology, nephrology, neurology. So we have an opportunity to find additional assets that supplement those areas with earlier-stage projects. Robin can speak a little bit to the financing capacity, but we're not constrained from a financial standpoint, particularly early-stage deals. As we go into next year, I think the balance sheet builds, and we're able to think about larger single transactions. That may be dependent on some of these pipeline readouts where we deploy that capital. But we're very fortunate position that we have now the scope to invest in many different areas, a robust late-stage pipeline and growth products. So we're able now to think about how do we ensure long-term sustainability by investing in early stage.
Got it.
And maybe just touching on the capital available. So, what we've said is that we fully expect to pay down the debt associated with the Apellis transaction by the time we exit 2027.
In the meantime, we have sufficient capital to do the activities that Adam's talked about and making sure that we are deploying capital in the front end of the pipeline, exhibited by the recent announcement we had on Reata, which we closed in Q3, which is an immunology asset going into phase I. We are really back to optimal liquidity here as we exit 2027.
Got it. So one last question for both of you. Fast-forward one year, September 2027, Wells Fargo Conference, I hope you are here, I hope I am here. So, if we are sitting here
Yeah
Next year, what would make you look back at the year and say, "It was a great year for us?
Two things. One, we meet our commitments as it relates to the existing growth portfolio, both top and bottom-line performance. The second would be that we are extraordinarily busy working on doing pre-launch and launch activities associated with lupus and with AMR.
Yep. I would just add, I think that the continued progress of the commercial growth products is an area that will really underpin the midterm stability for the organization. I think delivering on those commitments are going to be key. We look forward to giving those updates next year.
Yeah.
Awesome. On that high note, thank you very much and good luck.
Thank you.
Thank you very much.
Thank you. Thank you for your time.