Biogen Inc. Common Stock Q2 2026 Earnings Call

Please stand by. We're about to begin. Good morning. My name is Jess, and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen second quarter 2026 earnings call and business update. 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, Jess, and good morning, everyone. Welcome to Biogen's second quarter 2026 earnings call. During this call, we'll make forward-looking statements which involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review. Our earnings release and other documents related to our results, as well as reconciliations between GAAP and non-GAAP results discussed on this call can be found in the investor section of biogen.com. We've also posted slides to our website that will be used during the call. On today's call, I'm joined by our President and Chief Executive Officer, Chris Viehbacher; Dr. Priya Singhal, Head of Development; and Robin Kramer, our Chief Financial Officer. Alisha Alaimo, President of North America, will also be available for the Q&A section of the call.

We'll make some opening comments, and we'll move to Q&A. To allow us to get through as many questions as possible, we kindly ask that you limit yourself to just one question. I'll now turn the call over to Chris.

Portfolio with the goal of achieving sustainable revenue growth. If I take the three elements that I think contribute to that is first is our growth product portfolio. Now, even before we include the products from Apellis, we've seen significant growth, and in fact, our growth portfolio now is greater than our legacy MS portfolio. That's really been most recently enhanced by two important achievements. The first is SPINRAZA high dose where we've seen across all markets. The first market to be approved was in Japan, then Europe, and now the U.S., and we're starting to see this roll out into more international markets. In all of those markets, this conversion has gone much faster than we expected, and that's an important development for us because this is an extremely competitive market where efficacy matters, and we've seen considerable efficacy benefits come from the high dose of SPINRAZA.

This is a franchise that we see for the longer term because we've got salanersen coming along behind that. Maintaining market share and in fact, what we're seeing is some anecdotal switch backs particularly from the oral product to SPINRAZA. It's important not only for the quarter, but important for the franchise longer term. The second major achievement this quarter was really LEQEMBI IQLIK. It's the first of its kind Alzheimer's treatment, so now offering home dosing for both initiation and maintenance. I think there's probably two opportunities in particular here, maybe even three. The first is obviously with the biweekly infusion. A number of physicians are thinking carefully about which patients are actually going to be eligible for treatment.

If they don't think that the patient can get there on their own, or there's not a caregiver who's prepared to take the time to get that patient to the infusion centers those patients are often not offered treatment. This should perhaps make it easier for a broader section of patients to become eligible for treatment. We think also that there could be a benefit in maintaining patients longer on therapy. Finally we think there's a competitive advantage because the benefit that the competitor has with once monthly dosing now seems to be much less when you've got a home subcutaneous option for them. The second element of the sustainable growth is our pipeline, and we'll come on and talk about that in a few minutes. The third element is really SYFOVRE and EMPAVELI from the acquisition of Apellis.

You've seen strong double-digit growth for both the full quarter and year to date for the combined sales of those two products. Now we're only consolidating the revenue from the 14th of May when we closed the transaction. Those products are already contributing significantly to our own growth. I'll take the opportunity here just to note that if I think about all of the integrations that I've certainly seen over my career one of the most important metrics is really how revenue does through this period of turbulence really in organizations. There's an awful lot of uncertainty that comes from these major transactions. The ability to maintain continuity of revenue is, I think, the number 1 measure of the success of an integration. I think so far that we have seen that, and that's really because this is mostly a U.S. transaction.

This is really a credit to Alisha Alisha's leadership and her team in really reaching out and making sure that the Apellis team feels great about joining Biogen. Certainly, when I talk to the former Apellis, now Biogen employees, one sense is a sense of energy and passion and commitment. We're very much encouraged by the importance of this acquisition. The next slide is really, again, Priya is going to talk a lot more about this, but we've got a growing base, and now we've got five registrational phase III clinical trial results coming along. Obviously, two in SLE for lupus, one in CLE for lupus, one for AMR and one which is really from our partner at Stoke in Dravet syndrome. Those are now within the next four quarters.

These are imminent and could really make a difference to the long-term growth outlook of Biogen. As we talked about before, we're also rebuilding our early-stage pipeline. We went 3 years really without filing an IND. We made some really pretty dramatic moves to overhaul our research organization, how we do research. The encouraging thing is that I think we are now in a much better place already in our early-stage pipeline. Some of that is coming early. We've had 3 INDs already this year. We've got more to come. We've done a number of key collaborations like Vanqua and Dayra last year, the acquisition of RayThera this year also substantially boosts our early-stage pipeline. This is really investing today for really what would be products launching in the mid-2030s. You've got to start today if you want to have that growth tomorrow.

If I look at this slide, this is a slide we first showed at J.P. Morgan earlier this year. At that time, we said, "Look, there are a number of near-term current growth drivers," and you see them with LEQEMBI and ZURZUVAE, VUMERITY, SPINRAZA, SKYCLARYS and QALSODY. That is the group of products that now exceed our legacy MS portfolio and grew strongly in the quarter. When you add SYFOVRE and EMPAVELI, these products already in themselves are enough to help Biogen get back to a growth story. When you look at what's coming, we just talked about these imminent data readouts. That's the second wave here, the registrational late-stage pipeline. These are all products with significant opportunity. This is also a major shift for Biogen. 3 and a half years ago when I came, we really only were visiting the neurologist.

We had a few products that we could still promote in MS, and we had SPINRAZA. We are now looking at visiting rheumatologists, dermatologists, nephrologists outside the U.S., epileptologists, and nephrology transplants. There's been a significant growth in the breadth of our portfolio. That's exciting. It also means that really now we are shifting to not just growing the substrate of growth, but now executing on that growth story. There's a lot going on inside the company to make sure that all of those launches are a success. We're also keeping an eye on the longer term, and that's that third wave, the opportunities for longer-term growth. diranersen, and you've seen the data on that, very promising new modality in Alzheimer's, not necessarily part of the equity story near term, but longer term, this could significantly contribute to Biogen's growth.

This is where this renewed early-stage pipeline that I just talked about is so important and the research portfolio. From a BD M&A point of view, I think we have what we need to grow near term. I think we'll be less intentional about M&A and perhaps more opportunistic. We'll be certainly intentional about the earlier stage development. Ideally, we'd like to be bringing in assets between development candidate and IND stage. When you look at what is the opportunity, and these are not revenue forecasts, but really an initial sense of what's the addressable market that come from the pipeline, and I would say we're still doing work. We've got lupus here as a potential $8 billion market. The MS market is over $20 billion. I think we're not there yet in terms of being able to really say how we access that.

It's probably a $2 billion-$3 billion market today, There's no real reason why this market shouldn't be the size of MS. Even if you just say the $8 billion, that's a significant opportunity for us to go after, and obviously not only with litifilimab, but we would hope to be the first product to be approved for CLE. You got AMR, approximately 11,000 patients just in the U.S. alone. Phase III data coming in early 2027. That's at least a $2 billion addressable market here. It depends on which pricing you're using, but when you see the pricing that is now occurring in IGAN, that is going to have a spillover effect on AMR. When you think about microvascular inflammation, which is another indication we're pursuing, that market could also grow.

Of course, then later on, we've got IGAN and PMN data coming for felzartamab. Dravet syndrome, as you know, we have the ex-U.S. rights, but even in ex-U.S. markets There are about 7,000 patients in Europe alone, and when you add up all of our key Biogen territories, that's at least a $2 billion opportunity. Again, we're busy working on that. We're still, in some ways, 18-24 months from launch on those things, and continuing to work. This shows the potential. It also shows why we have to execute with excellence, and we're busy investing today to make sure those launches are a success. We go to the last slide. If you looked at Biogen pre the Apellis announcement, consensus of investors was that Biogen was going to be roughly flat through 2030.

I think we're already seeing that consensus start to shift because people start to appreciate the Apellis transaction. The way we certainly see it is when you take the Apellis marketed products and you add them to our own growth product portfolio, I think we're seeing a growing picture. When you now then take the late-stage registration pipeline, I can remember vividly one investor in a meeting that we had just after we had announced Apellis saying, "I get it. The late-stage pipeline now comes on top of a growing basis instead of a stable basis." This slide neatly encapsulates really the strategy to return to sustainable revenue growth. With that, I'll turn it to Priya, who can talk a little bit more about that late-stage registration pipeline.

Thank you, Chris, and good morning, everyone. As we deliver the new Biogen, a large part of our transformation and near-term opportunity for growth comes from our late-stage pipeline, as Chris mentioned, I am excited about this future. That is because today we have one of the strongest and most diversified late-stage pipelines in Biogen's history, with multiple near-term opportunities to create value in the upcoming years. We shared this slide with you at the beginning of the year, Today you can see that we are delivering on the opportunities we outlined, including the FDA approval of IQLIK initiation, which is an important innovation for patients and caregivers. Beyond IQLIK, Biogen and Eisai presented new data at AAIC earlier this month. This included real-world evidence supporting the long-term benefits of continuous LEQEMBI treatment.

We also shared new data for diranersen, establishing proof of concept in Alzheimer's disease, and we are now focused on developing the next steps for the program. More broadly, we continue to demonstrate medical leadership across our portfolio with important new data presentations for both felzartamab and tofersen. While these milestones reinforce the potential of our portfolio today, what makes this period particularly exciting is what lies ahead in the near term. We are now entering a multi-year registrational cycle, beginning with SLE data by the end of this year, and followed by multiple catalysts extending through the remainder of the decade. While we remain focused on advancing our high-conviction late-stage opportunities, in parallel, we continue to invest in the next wave of innovation. The progress we have made this quarter has meaningfully accelerated the transformation of our pre-proof-of-concept pipeline.

At this point in the year, we are also now beyond our high-risk, high-reward readouts, as we mentioned at the outset. This includes our phase II BTK inhibitor, BIIB091, where we achieved proof of concept in relapsing remitting MS. In line with our disciplined approach in how we advance assets, we are evaluating next steps given the increasingly competitive nature of that market. As we rebuild our early-stage pipeline, we expect to add six new programs this year, including new phase II proof of concept studies to broaden the potential of felzartamab and EMPAVELI in autoimmune disease, as well as first-in-human studies from our internal pipeline and the lead asset from the pending RayThera acquisition, which is now already in phase I. We believe these investments are building a durable innovation engine with the promise of delivering sustainable long-term growth and value creation.

As we step back and look across the next several quarters, we expect readouts from five registrational studies across four important indications: SLE, CLE, AMR, and Dravet syndrome. Reflecting the strong execution of our teams and enrollment momentum, we have also accelerated the expected phase III readouts for felzartamab in AMR and litifilimab in CLE, with data now expected in the first half of 2027. Later this fall, we also look forward to presenting new 52-week data from the phase II portion of the ongoing AMETHYST study at the EADV Annual Conference, which we believe will provide important insights into the durability of response for litifilimab in CLE. Taken together, these milestones are expected to generate important data over the next several months that has the potential to shape our next phase of growth.

In summary, the strategic decisions and investments we have made over the past three to four years have positioned us to deliver near-term readouts while advancing long-term innovation, and we look forward to continuing to share our progress with you. With that, I would now like to turn the call over to Robin, who will provide a financial update for the quarter. Thank you. Thank you, Priya.

Good morning, everyone. I'm pleased to be speaking with all of you today following a strong revenue performance in the second quarter. Total second quarter core pharmaceutical revenue was $1.8 billion, up 4% year-over-year and 12% quarter-over-quarter. This performance was driven by our growth portfolio, which generated over a billion dollars of revenue in the quarter, up 24% year-over-year and 25% quarter-over-quarter. The Biogen standalone growth products, excluding our Apellis, SYFOVRE, and EMPAVELI revenue, was $933 million, up 9% year-over-year and 10% quarter-over-quarter. As Chris noted, generating revenue in excess of our legacy MS portfolio again this quarter. Our growth portfolio has been further strengthened with the addition of SYFOVRE and EMPAVELI from the Apellis transaction, which generated $128 million in combined revenue for the period post the May 14th acquisition date.

This quarter's results demonstrate strong commercial execution and the significant progress we've made in our portfolio transition. Let me now take you through some key highlights from our core pharmaceutical product performance in the second quarter. First, for the growth portfolio. SPINRAZA revenue was $402 million, up 2% year-over-year and 7% quarter-over-quarter. This was driven by both demand and stocking for the high-dose regimen in the U.S., partially offset by shipment timing in certain ex-U.S. markets. High-dose SPINRAZA was approved in the U.S. in March, the EU in January, and Japan last year. During the period of patient transition to the high-dose regimen, we benefit from revenue associated with the one-time transition dose. SPINRAZA high-dose maintenance is priced at parity with SPINRAZA.

We are pleased that the pace of conversion to high dose has been going well, and enthusiasm from the patient and prescriber communities for a higher efficacy option has been strong. We also believe this is encouraging for the opportunity for our registrational pipeline asset, salanersen, which has recently received breakthrough therapy designation. VUMERITY revenue of $197 million was down 7% year-over-year, partly driven by inventory dynamics, and up 10% quarter-over-quarter. Revenue for the first half of 2026 was up 7% versus the comparable period in the prior year. LEQEMBI in-market revenue was $184 million, up 15% year-over-year and 9% quarter-over-quarter. We saw a continuation of market growth in key markets including the U.S., Japan, and China. As Priya mentioned, we're pleased to have received FDA approval for IQLIK initiation earlier this month.

SKYCLARYS saw patient demand growth both in the U.S. and ex-U.S. in the second quarter, with revenue of $168 million, representing 29% growth year-over-year and 11% quarter-over-quarter. SKYCLARYS is now available in 36 countries, and we continue to expect SKYCLARYS growth to come largely from ex-U.S. as we advance the launch. ZURZUVAE continued to show strong underlying demand growth with revenue of $71 million. We're also pleased to announce that ZURZUVAE is now launched in Germany. For the MS portfolio, I would like to highlight that TYSABRI continued to demonstrate resilience and demand in the midst of a biosimilar launch in the U.S. and Europe. Second quarter revenue of $451 million was down 1% year-over-year and up 2% quarter-over-quarter.

We've invested for a long time to establish TYSABRI as an important option for MS patients, and we're pleased to see this reflected in the resilience of TYSABRI thus far. Turning now to an update on the Apellis acquisition, which closed mid-quarter on May 14th. The integration is progressing well, and both SYFOVRE and EMPAVELI had strong performance in the quarter. SYFOVRE continued to demonstrate market leadership with total revenue in the quarter of $162 million, up 8% year-over-year and quarter-over-quarter, with total commercial injections up 13% year-over-year. EMPAVELI continues to launch in C3G and primary IC-MPGN with total revenue of $46 million, up 123% year-over-year and 12% quarter-over-quarter. The Apellis acquisition accelerates our return to growth.

It adds two best-in-class commercialized medicines to our growth portfolio, which we expect to contribute materially to our top-line growth in the near and long term. We expect SYFOVRE and EMPAVELI on a combined basis to grow in the mid to high teens through at least 2028. In addition, we expect this transaction to materially increase our non-GAAP diluted EPS CAGR through the end of this decade. We expect approximately $120 million-$130 million of impact to our other income expense lines in both 2026 and 2027 associated with intrinsic expense and foregone interest income associated with financing the transaction. We expect to generate at least $250 million of run rate synergies by the end of 2027, largely from optimization of general and administrative expenses and R&D. For 2026, we expect approximately $0.85 of non-GAAP EPS dilution, primarily from financing costs associated with the transaction.

We expect the transaction to be accretive to non-GAAP diluted EPS in 2027. We believe this transaction represents an attractive use of capital that will further bolster both our top-line and bottom-line growth prospects in therapeutic areas aligned to our immunology and rare disease strategy. Moving on to the financial highlights. Total revenue for the quarter was $2.7 billion, up 3% year-over-year. Revenue from the anti-CD20 royalties and profit share included in other revenue was $514 million, up 10% year-over-year. This increase was driven by royalties from OCREVUS, which benefited from the recent subcutaneous launch and resilience from RITUXAN in the U.S. In addition to the revenue contribution in the quarter from SYFOVRE and EMPAVELI, as previously discussed, our results of operations for the second quarter of 2026 include a half a quarter of operating expenses and financing costs associated with the acquisition of Apellis.

Non-GAAP cost of sales as a percentage of revenue was 22% in Q2 2026 versus 21% last year. The increase was primarily due to product mix, largely from increased contract manufacturing revenue. GAAP cost of sales as a percentage of revenue was also impacted by higher amortization costs associated with the acquired inventory, fair value step-up adjustment for SKYCLARYS from the Reata transaction and SYFOVRE and EMPAVELI from the Apellis transaction. Non-GAAP core OPEX or combined R&D and SG&A expense increased 20% year-over-year. This reflects approximately $95 million of Apellis operating expenses from the May 14th acquisition date through the end of the quarter. For R&D, it also reflects our investments in our phase III clinical programs, including felzartamab's indication in MVI and salanersen, which were advanced as registrational studies in the second half of 2025.

Litifilimab, where we expect the phase III SLE data later this year, including a $25 million year-over-year decrease in R&D funding from the Royalty Pharma funding for litifilimab. For sales and marketing, it reflects support of our U.S. and international product launches and investments in pre-launch activities for our late-stage high-conviction pipeline. As we previously announced, we recorded $164 million of acquired IPR&D and milestone charges associated with our investments in the development pipeline in the second quarter of 2026, including a $100 million upfront to TJ Bio associated with the acquisition of the felzartamab rights in China, giving us worldwide rights to felzartamab. A milestone payment of $45 million to Ionis in connection with the initiation of the phase III trial for salanersen in SMA, and an upfront payment of $15 million to Ionis to opt in to BIIB1407 in broad ALS.

Turning to cash flow and the balance sheet. We continue to generate strong cash flow with $408 million of free cash flow generated in the second quarter. We exited the quarter with $1.3 billion of cash and $6.8 billion of net debt. We closed the Apellis transaction in the second quarter, which was funded with $3.6 billion of cash from the balance sheet and $2 billion of term loan. During Q2, we repaid $200 million of the term loan and continue to expect to repay the remainder of the term loan by the end of 2027. Turning to guidance. Based on the expected revenue performance of our base business, including our growth products and TYSABRI, our guidance update reflects a $0.60 increase in the underlying business guidance as compared to our previous guidance.

Increasing our total revenue guidance from a mid-single-digit % decrease to a mid-single-digit % increase. This reflects both the expected performance of our growth products in TYSABRI, as well as the addition of SYFOVRE and EMPAVELI into our product portfolio. Our guidance also reflects updates to core operating expenses, other income and expense, and our full-year tax rate, primarily to incorporate the impact of the acquisition of Apellis. We expect our core operating expenses in the second half of 2026 to be between $2.65 billion and $2.7 billion. Our guidance also reflects updates associated with our strategic investments in the early and late-stage pipeline, as well as those associated with our near- and mid-term growth. It incorporates transactions that have been executed and our current expectations of those that will occur for the remainder of the year.

Incorporates approximately a $3 non-GAAP diluted EPS impact of charges associated with IPR&D and milestones, including the Q2 TJ Bio transaction, the Ionis milestone associated with achieving the first patient dosed in STELLAR-1, our pivotal Phase III salanersen study in SMA, and the pending RayThera transaction associated with the addition of a Phase I immunology asset into the early-stage pipeline, which is expected to close in Q3, and the expected full-year 2026 $0.85 dilution associated with the Apellis transaction, again, largely driven by the impact of financing costs. Our updated 2026 full-year non-GAAP diluted EPS range is now between $12 and $13. Please be sure to review this slide, as well as slide 25 in the appendix of this presentation and our press release for other important full-year 2026 guidance assumptions.

In closing, strong commercial execution in the Biogen-based business and the addition of Saphnelo and EMPAVELI resulted in strong top-line performance in Q2, and the completion of the Apellis acquisition accelerates our near and mid-term top-line and bottom-line growth potential. With that, I would like to pass the call back to Tim to open us up for questions.

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

Certainly. If you would like to ask a question, please press *1 on your telephone keypad. As a reminder, please limit yourself to one question. If you require any further follow-up, you may press *1 again to rejoin the queue. Your first question comes from the line of Chris Shaw with J.P. Morgan. Great. Sorry. On mute again.

Just a quick question for me on HD SPINRAZA. Just elaborate a little bit more on how the ramp is coming here compared to internal expectations and just any metrics you can share on the conversion you're seeing in some of the markets where the product has been launched for longer. Maybe also as part of that answer, can you just talk about how meaningful is the impact from patients switching back to HD to overall volumes for the product as well? I'm just trying to get just a general sense of just how this is progressing and impacting the franchise. Thank you. Hi, Chris. This is Alisha.

I'll take that question. If you really think about SPINRAZA, it's almost a decade after introducing the first SMA treatment. What I think you're seeing is SPINRAZA still setting the bar on efficacy in the space. If you think about how did SPINRAZA HD even come about, this was from several years ago. We had many patients come forward to Biogen saying, "We just wish we had more. We wish we had more. We feel like we could take an even higher dose." Obviously Biogen went in and developed this new formulation, and here we have high dose today. Now that we've launched, we are seeing basically the demand and the urgency really being driven by this patient community.

In fact, if you think about metrics, SPINRAZA high dose is exceeding the original launch of SPINRAZA in both start forms and grads in the first 13 weeks of launch, we are growing every single week. When you look at the Q2 revenue, sites are ordering high dose to prepare for each patient's next dose. When you think about the dosing of the product, you do have to wait a quarter or two, depending on when you had your last dose of SPINRAZA. The feedback from patients so far that have received the product has been quite positive, also from the physicians, quite positive. The teams are really supporting the payer approvals and the account P&T reviews and patient transitions. Now, in this initial bolus of launch demand, you are seeing that the majority of the patients are transitioning from SPINRAZA 12 mg to high dose.

We also have several patients who are either new to SPINRAZA, particularly babies. We hadn't dosed a baby in years, we are seeing babies now getting dosed. We have had several switchbacks from risdiplam. We think for this year, what you're going to see is the bolus of the transitions along into the beginning of next year. Our big focus for 2027 is going to be on new starts and on switchbacks. One of the advantages that you have that we didn't realize was going to be such a positive in the market is with the SPINRAZA 12 mg, there are four loading doses.

With high dose, there's only two, we do have patients who are more willing to do the two as the loading dose than the four, that is where you're seeing also some of the switchbacks and new patient starts.

Just the U.S. is actually one of the last countries to launch, actually unusually so. Japan, where we launched earlier, as in Europe, that's where actually we're seeing, particularly in Germany, seeing a reversal of a trend of switching to oral therapy and some trending back. Now, I think it's still early days, and as Alisha said, it's largely first people moving from the lower dose to the high dose. Again, as Alisha said, in all markets, and I go talk to physicians around the world when I'm visiting our affiliates. At the end of the day, it's really in these devastating diseases efficacy that really matters, and there is an enhanced opportunity here for that.

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

We'll go next to Umer Raffat with Evercore.

Hi, guys. Thanks for taking my question. I want to touch up on expectations ahead of your lupus readouts this fall, specifically, we've seen BENLYSTA track at sort of mid-teens separation on SRI. We've seen Saphnelo from AstraZeneca track at something in the 20s. Based on all the work you guys have done, what separation versus placebo would constitute something that's considered very clinically meaningful and differentiated over what's out there in the marketplace right now? Priya, could you also just remind us what dose of your BTK inhibitor is going forward? I'm just trying to think about the liver implications, but I would love to know what the dose is. Thank you. Thanks. This is Priya.

I'll take that. I think just stepping back, we're really excited about our TOPAZ trials. This is TOPAZ 1 and 2. We will have results from both of these in Q4 this year. These are our SLE trials. Maybe just stepping back, I'll just comment on the fact that we've taken all the learnings from the prior trials to really ensure that we set these trials up appropriately. By that, I mean we've focused on the high placebo responses that we've seen in past trials. Our trials have had rules to limit standard of care utilization. By that, I mean NSAIDs, corticosteroid tapers, handling data for responders and non-responders. We've also stepped up to really think about the fact that this is a heterogeneous disease. How do we control for patient and participant heterogeneity?

We have tried to model our inclusion-exclusion criteria to track very closely to phase II LILAC proof of concept. With regards to what we expect, I think we remain confident in our trial design, site selection, patient selection, really to get a very robust response. We'll see how we perform in the trial, and we'll wait for the results, I won't speculate. Our primary endpoint is SRI-4. However, we have a key secondary endpoint in BICLA, and we have multiple patient-reported outcomes. We'll really be looking at the totality of the data, including interferon signature and all of that. I'll also remind us that from an MOA perspective, we think that litifilimab is truly differentiated. Yes, it affects the interferon pathway, but it also affects chemokines and cytokines, and we think this is what's going to provide really the overall benefit.

Then, of course, CLE, we expect data next year, and we'll be presenting 52-week data at EADV this fall. We remain confident in that data set as well. Moving to your second question on the BTK inhibitor. We haven't actually disclosed doses, I won't be sharing much more information, and we're looking at what the next steps might be for this.

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

Yeah. Thank you, Chris. Hi, Umer. Nice to hear from you. First of all, we have now recruited several senior leaders with lupus experience, an entire medical team with lupus experience, and several marketers with lupus experience. I have to say, we've probably gotten more insights from them than the actual market research that you can get through third parties. I have to say that we talk about things like SRI-4 and endpoints, but when you really look at a physician and a patient and interactions they have, what we're finding in this market is there is a huge disconnect on what they expect from treatment.

Doctors want to run a patient's experience just by what they see in labs, and patients will come in and say, "The three things that are really bothering me are fatigue, brain fog, and joint pain." I do believe in this market, when you look at CLE, where there's only less than 5% of CLE patients receiving an advanced therapy. I also, because there is no approved therapy, think the CLE patient numbers are under-called. I know that we've reported out 75,000. I think that that is a much lower number than is actually out there. Secondarily, you're seeing that patients are getting lost in the system, being transferred from derm to rheum and rheum to derm, where no one really knows how to treat them. Then with the treatments that are on market as of today, there are downfalls.

One does not work very quickly or very well, and another has an infection safety issue. When you speak to these physicians, they are really looking for a treatment that can work much more quickly and can work in both CLE and SLE. I think that there's a very long runway for this therapeutic area. Because there is such a huge unmet need and these patients are known, we can track them in the system because most of them are diagnosed. We know which physicians they've been diagnosed by and who they see. I think that even though there is a lot of work to do, I find this to be a very good therapeutic area to enter.

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

We'll go next to Marc Goodman with Leerink Partners.

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

There is a lot going on with SYFOVRE since we've been able to integrate them into the organization. First, I want to say I'm very much impressed and very grateful for the level of talent and expertise that joined from the SYFOVRE team. I think the first thing that we have noticed with both SYFOVRE and EMPAVELI is when they came on board, the company both used very similar launch plans. I think the one thing that we've really learned over the last seven years with our 7 launches is that we really tailor-make our launch plans. We really build them from the ground up. We launch very much informed, and it's not templated.

What we've been able to do is work with the SYFOVRE team on across the board, understanding what's really driving sales, where can we maybe reallocate capital, and how do we get the Biogen machine to sort of help drive some of their momentum. I'm very encouraged by the strongest quarter since really launch for SYFOVRE. In the month of June, the month of June was the best month in the brand's history. What we're really seeing is the quality of growth across a number of areas. I think number 1, you're seeing our free drug has been lowered by half. We did end up looking at free drug programs and looking at where we put some guardrails in place to make sure really only the patients that need access to free drug do get it. That has dropped by half.

That has been part of momentum. If you look at where this brand started on sentiment across HCPs for slowing the progression of GA and where physicians are today, the SYFOVRE team has done a truly tremendous job on changing that sentiment. Because sentiment has improved so much, that is where you're seeing new writers coming on board. It's also where you're seeing many more patients coming on board. They grew both in patient numbers and in physicians who are prescribing. I think that one of the tailwinds on that was the long-term five-year data that they've been presenting, which is really a lot of education around slowing the progression of GA. Specifically, when you look ahead, the market's only 50% of the retina specialists are treating, and only 20% of these patients are diagnosed. The team is really looking at a couple things.

One is the direct-to-consumer. We have decided to shut down a few programs we're reallocating to a new commercial. I think maybe the SYFOVRE team and leadership thought their DTC came out a little too soon. Now that we think that the market is ready, we do plan on launching a DTC campaign that we believe will be very effective. Prefilled syringe. We do look forward to that launch as well. Prefilled syringe is going to really support the workflow for physicians. We believe it will make it much faster for them, much more efficient, and they probably will be able to get more injections into the eyes with saving them approximately 15 minutes with these injections, that's also great.

More importantly, on a previous call, I think I'd mentioned to you when we were looking at SYFOVRE, one of the things we had seen in our diligence is that there really was a big discon. A lot of patients discon after a year. Well, now that the team is on board and we've really looked at the data, we've noticed that actually the discons happen after the first injection. That's where the big bolus comes from, even though it really only shows up in the numbers after a year where you see the 50% drop-off. We now believe due to all of the brands that we've had, where we've had discon issues after either the first injection or first IV infusion, we know exactly what to do for that.

We are also rallying the team around how we support educating those patients and physicians on why they do not need to discon after the first injection, what kind of education needs to happen in the doctor's office. Right now, we believe the HCP growth is trending in the right direction. We believe we will keep up that momentum. Our focus is going to turn to educating the patients and activating them with DTC.

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

We'll go next to Salveen Richter with Goldman Sachs.

Thank you. Good morning. Just circling back on your BTK inhibitor, BIIB091. Could you just speak to how you expect this asset to be differentiated versus the later-stage assets under development and how you're thinking about the safety profile given what's been seen? Thank you. Thank you, Salveen.

This is Priya. Just stepping back, we took BIIB091, which is a peripheral BTK inhibitor, non-covalent, into a phase II trial in RRMS a few years ago. Now we've concluded the trial, and what we see is that it could have compelling efficacy in RRMS. Actually, as I mentioned in my remarks, we are looking at what is the appropriate next step. We see RRMS as a very crowded, competitive market. We're also looking at the external inflections that we've seen in the BTK landscape. We will communicate more about how we see this asset progressing further. We haven't actually made a decision to specifically advance it into an indication. We're not there yet. We're still evaluating the data.

Overall, we see that it could perform really well in RRMS, I think it's another very important example of how we prioritize assets in our portfolio, where we look at the scientific data, but we marry it up with the value and the opportunity in terms of totality and really capital allocation. This is an example of where we're taking a pause, we're looking at the data, and we will assess how and when and if we would advance it beyond where it is today. I hope that helps. Thanks, Priya.

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

We will go next to Michael Yee with UBS.

Thanks. Our question actually is going back to litifilimab in CLE. Do you believe that CLE is a higher probability given perhaps less heterogeneity of the patient population? You've already sort of talked about some of the risks in SLE and heterogeneity and placebo rates. Could you just comment about your view of CLE versus SLE and perhaps some of the data you might be getting at EADV that could help drive more confidence in that? I think there's some additional data presentation coming up. Thanks. Thank you. I think stepping back, I actually don't see a difference in terms of probability of success, between SLE and CLE.

I remain confident in really the data that we saw from our LILAC phase II trial, which we believe was a compelling proof of concept trial. It was important because we tested the SLE population. However, it was enriched for where we believe litifilimab will have the strongest actions based on its mechanism of action. We have focused our SLE trial to be quite specific to patients who have skin and joint involvement. That is why I think I remain confident in how we've set this trial up and probability of success. Similarly, with CLE, I also remain confident because of the focus on the skin and the data that we've generated so far.

It just happens to be the situation that for SLE, given the broad indication, and it's a very unfortunately prevalent disease, we have two phase III trials. With CLE, we have a phase II, phase III trial, and that was a seamless trial, the AMETHYST trial. You may remember that we actually have the opportunity to share phase II data. It is not because we are more or less confident that we're sharing it. We have the opportunity to look at the phase II data by itself without disrupting the phase III portion. We are just simply taking that data forward and bringing it to EADV. We've already shared the phase II randomized control part of AMETHYST earlier this year. Now we're sharing the 52-week data, which hopefully will say more about durability of response.

No, I think, we remain confident in all three trials. As was mentioned, we think this is really highly undertreated. Very few biologics have made it, and they haven't really penetrated the market, and we think that is actually related to their treatment response and we think, with the right mechanism of action, we could meet a very high unmet need in this area.

Go to the next question, please.

We'll go next to David Amsellem with Piper Sandler.

Hey, thanks. On EMPAVELI, noticed you are initiating a phase II in FSGS. Wondering broadly how wide of a development net you're going to cast regarding the molecule, just given its complement C3 inhibition and how you're thinking about other indications potentially beyond FSGS. Secondly, if you can comment on your anti-CD40 that's phase I ready, maybe comment on how it's different mechanistically than the CD40 ligand antagonist, dazodalibep, that Amgen is running a phase III program in Sjögren's. Thank you. Thank you. Maybe I'll start with EMPAVELI there.

I think we remain excited about the fact that we've brought in EMPAVELI and of course, its nephrology indications as well as the paroxysmal nocturnal hemoglobinuria remain very important commercial indications. We brought this in, our legacy Apellis team was already working up a lot of indications, and we looked at these and there were two important nephrology trials that they were considering. One was delayed graft function, which we have paused, and we would not be continuing that. The FSGS, we believe remains a really important indication. The reason for this is that we believe it's a high unmet need. It does have clarity on primary endpoint and a regulatory pathway, as well as the ability of EMPAVELI to really address the C3, C3b cleavage pathway and thereby impact the autoantibodies.

We have real world data, also murine models where we've seen elevated levels of C3. We believe this really is a science forward approach and we're being very prudent. We're taking this forward as a phase II proof of concept, and we could have data really in short order once we initiate the trial. We also already have sought, I think our EMPAVELI legacy team has already sought FDA feedback. This really comes with a really nice package which we believe is worth prosecuting. That's where we are. We will be looking across really where does complement, specifically C3, have a large role in disease. The other part, as I mentioned in the other example just a short while ago, is really the value proposition. We are always looking at the addressable market.

For example, with this FSGS, we know there's about 27,000 patients in the U.S. We know there's 4 types. We will be running a very clear and decision enabling trial to really give us next steps.

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

Thanks, Priya. Jess, could we go to the next question, please?

We'll go next to Alex Hammond with Wolfe Research.

It's been a few weeks since you posted or presented the full CELIA data at AAIC. I guess given it's been some time for you to digest the reaction from the medical and regulatory community, what feedback have you been getting? Has there been any feedback that's kind of shifted your thinking at all in the phase III trial design, particularly the potential for early combination with A-beta antibodies? Thank you. Yeah. I'll take that one.

As I said in my remarks, diranersen is really part of the longer-term story of Biogen. The phase II was really an exploratory study. The main objective was really to see if you reduce tau, could you move cognition? Because up until now, tau has been a theory, been a favorite theory, but it's still a theory, and this is the first time anybody's shown any data on this. Now, the business decision really to go forward with that is Priya had already, when we got the data, arranged for an independent biostatistician to review the data. We had an outside ex KME review the data before we announced it. Then multiple advisory groups. We had the AAIC. One of the very strong feedback is the signal is real. This is not due to chance.

A lot of people got there doing a lot of over-analysis of the dosing question. There's a lot of different hypotheses. There's one, it's very clear that tau is important to neurotransmission. While too much is not good, maybe too little is also not good. We just don't know. This is the issue of being in breakthrough. It's very exciting, but it's also one of the reasons we decided not to build a company on this type of product. This is one of these high risk, high reward. We're doing a lot of investigation and discussion with the neurology community. Obviously, we'll be consulting with the FDA. We also have long-term extension data that are coming along, and we'll make those available. This is a long-term investment. We're confident in the signal.

It could be an exciting option, but still going to have to go through phase III, and it's not something that's going to affect Biogen's growth over the rest of this decade. That's all we really want to say about diranersen at this stage.

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

We'll go next to Brian Abrahams with RBC Capital Markets.

Hey, good morning. Congrats on the solid quarter. Thanks for taking my question. On subcu LEQEMBI induction, just curious what the initial demand or interest has looked like on the ground here versus your expectations, then your latest views on the access dynamics and potential timelines there. Thanks. Hi, thank you. I'll take that question.

As you know, earlier this month, we received approval for LEQEMBI IQLIK for induction. It will be available by the end of August in market. What we've done is our field teams are trained. We are educating the HCPs, letting them know availability is expected next month. We've already had some demand. Of course, it's not getting filled yet, but they are put into a queue. We've had, as of yesterday, several physicians have already written scripts, we're not really counting that yet in our expectations until the product is actually readily available for the market. We're keeping a close eye on that.

As you also know, Eisai is trying to make access very easy for this and as simple as possible, and they are the ones working with the payers on Part D access. We will find out again in several months what kind of access we'll receive at the beginning of next year. However, even if some of the Part D plans don't contract for LEQEMBI, the other route, which they've been going through with LEQEMBI IQLIK maintenance, has been medical exceptions. When we pull the data to look at the medical exception rate for the product, it is quite high. Higher than most other therapeutic areas. Even when a physician does put that through, the grant approval rate is high, meaning that they are getting the product for the patient.

It remains to be seen what happens as of 1/1 next year for the coverage. Which, by the way, even if you get a Part D plan coverage, a prior auth must be filled out. A doctor's either filling out a prior auth or filling out a medical exception form for the product. We also believe that based on the market research that we have done recently, LEQEMBI IQLIK will evolve this market and will be another contributor to growth once it gets off the ground. Keep in mind, a lot of the protocols for LEQEMBI are written for IV, and so a lot of the IDNs and hospitals and systems are starting to rewrite those to incorporate LEQEMBI IQLIK obviously also into their workflow.

We also see that, and Chris had mentioned earlier, when you look at drop-off rates, which there's drop-offs at many points in a patient journey. One particularly is when they finally get to a physician who believes in AAT and goes to prescribe the product. One of the largest drop-offs are patients not wanting to take IV in general. That is agnostic of LEQEMBI or of Kisunla. We also believe in our market research, it shows that those patients would opt on to doing subcu. There is a big portion of patients that drop off exactly for that reason. We believe that that will also help accelerate the market.

Go to our next question please, Jess.

We'll go next to Paul Matteis with Stifel.

Hi. Great. Good morning. Thanks for taking my question. How are you guys thinking about the brain shuttle space right now? As you think about yourselves investing so much in building this Alzheimer's market, do you feel like Biogen needs to have a brain shuttle to capture what the peak sales potential of A-beta is going to look like? If so, what's the best way to get there? Thank you. Thanks. It's a very important area for us and has been for a while, precedes any data readouts that we've had recently.

That's what I can tell you. We are working internally. We're also looking externally, we've been doing the work on shuttle delivery really deeply here. We remain very interested in getting to tissue delivery modalities, I think we would think about that across several targets. That's what I can share, it's a high priority for us.

Yeah, longer term, Alzheimer's is certainly going to be a core part of the portfolio of Biogen. Particularly now that there's a very good chance that lecanemab ultimately makes it to market. Clearly, we have to go through the phase III program. Again, I think what really is important for this market, you talk to physicians who actually treat patients, it's really moving cognition. That's what has caused us to go forward with lecanemab. Now, it probably makes sense to have a portfolio of products. We're already even talking internally, we haven't made any decisions yet, are you going to combine an A-beta with an anti-tau, for example? There's a question of, well, maybe you don't even need to take, after you do, say, three, four injections of anti-tau, maybe you need just an anti-A-beta to actually keep the tau from coming back.

All of those things are kind of what we're war gaming. This would be something that certainly would affect the business in the next decade. I think if we're going to be in Alzheimer's, we are certainly looking to have a portfolio, and clearly, brain shuttles would be the next generation of products to pursue. As Priya said, we've been working on that for several years now. Thanks, Chris. We'll maybe try and squeeze two last ones in. Could we go to the next one, please, Jess?

Certainly. We'll go next to Evan Seigerman with BMO Capital Markets.

Hi, guys. Thank you so much for taking my question. I think, Chris, you had mentioned felzartamab and AMR could be a $2 billion opportunity, that's really not reflected in Biogen's current valuation. What do you think we, as investors, need to see to be convinced of that? What could you be showing us when we get that data come next year? Thank you so much. Thanks, Evan.

One of the things that we saw when we were doing diligence on Apellis was that there really hadn't been much value associated with EMPAVELI. I think there is a tendency to really focus on kind of lead products in companies. For some of these programs where there is no treatment, there are also no analogs. I think what we see is, and what we've heard from a number of analysts and experts, is that there tends to be a placeholder value put in there, and people then want to wait and see the data. 11,000 patients, and if you took even the Otsuka price for IGAN of $350,000, you're getting somewhere between a $3 billion and $4 billion market.

When you consider that the phase II data showed an 80% resolution of AMR in an open label in a small study, obviously something we have to repeat in a phase III. There is no product approved for AMR today. The option for patients is either treatment with felzartamab or perhaps a second kidney transplant. I was in Brazil recently and visited the hospital where they do more kidney transplants than anywhere else in the world. They estimate that somewhere between 10% and 20% of people on the kidney transplant list are people who've already had a kidney transplant. There is a huge unmet need. This is a product that really seems to work. We have very high hopes for this product. Thanks, Chris. Let's go to our last question please, Jess.

We'll go to Terence Flynn with Morgan Stanley.

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

We haven't commented publicly on the powering. We believe we have a very robust trial design and power to really give us confidence in the outcome. I think we remain confident in our trial design. As you know, the trial, the TRANSCEND trial, is a 6-month placebo control. This is biopsy-driven as an endpoint, which is really important. Patients move on to maintenance for the next 6 months. I think durability, but the 6-month time point are both important. I think that's another really good sign, we've been able to accelerate the trial, now we expect data in the first half of 2027. I think overall, we remain really excited. Now, the MVI is obviously a more recent diagnostic criteria through the Banff criteria.

This is important because these are donor-specific antibody-negative patients. It's a very important population. What we decided to do, along with our HI-Bio team, they are absolute experts in the area, is to actually initiate the MVI trial, which is the TRANSPIRE trial, as soon as possible. That trial is already underway. We will also have data emerging from that trial. We think that, yes, the felzartamab mechanism of action of addressing plasma cells and the anti-CD38 will have an impact in both MVI as well as in AMR. MVI itself in the U.S. is a sizable population of about 6,000 patients. This remains an important auxiliary but very important aspect of the unmet need.

We think this is really a very important opportunity, and we remain confident that felzartamab really has a very good high probability here of giving us the data that we're looking for.

Great. Thanks, Priya. Thanks everybody for joining today. If you've got follow-up questions, you know where to find us. Take care. Thank you. Ladies and gentlemen, that will conclude today's call.

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