Biogen Stock

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. [Operator Instructions] Today's conference is being recorded. Thank you.

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

Thanks, Cynthia, and good morning, everybody. Welcome to Biogen's Third Quarter 2026 Earnings Call. During this call, we will 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 Investors section of biogen.com. We've also posted the slide 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 and to allow us to get to as many questions as possible, we'll ask you to kindly limit yourself to just one question.

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

All 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. But I'd also say that I think the acquisition 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 is here, and I have to give Alisha a lot of credit for her leadership in and really ensuring that the Apellis team has felt welcome within Biogen. And 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 health care professionals and patients that we serve.

So 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've learned is you're going to do a bolt-on, you have to bolt on to something solid. And 1 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 at a top level.

And that's important because when you do an acquisition, there is an inevitable amount of distraction. And if you've got a team that's 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.

And so I think we've really realized the synergy between the folks from Apellis, who joined the Biogen teams. They've come together. And when I look at SYFOVRE and EMPAVELI, you can see 30-some percent year-over-year growth of $243 million. that's already on a run rate of $1 billion, and we're on track to realize $250 million of run rate synergies by the end of 2027.

And in fact, you'll see from the guidance that we put out and Robin will detail this more, but we've 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. On an operating level, the dilution is already pretty much negligible.

If I look at Biogen's own growth portfolio, $1.26 billion, that's 50% year-over-year growth. That's now almost getting to 2/3 of our core pharmaceutical revenue in Q3. And so this is where the story has been that we've obviously had a legacy portfolio that continues to be resilient. But the future is really with the growth products.

And so if I go to the next slide, we've really got 3 key priorities here. One is to continue to grow that commercial portfolio. And as I say, the 50% growth is extremely strong. and we expect to return to top line growth in 2026. I will say that the resilience of the legacy MS portfolio, I've said this in the past, it's 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. And I think that is a capability that's going to be extremely important as we turn to the next priority, which is multiyear registrational data flow.

The first point I'd make on that is, given the Apellis acquisition, we now think that the company can grow even without the pipeline. So 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'll be able to launch products on top of a growing base.

The other I would say is there's going to be a number of areas where we're still in breakthrough AMR is a market, for instance, that doesn't exist, MDI 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, just taking market share. That will also be important in lupus.

And Alisha can provide a lot more insight here. But when you look at the lupus market, is it 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, many years. And with only 2 approved biologics physicians tend to conserve those biologics until a patient progresses. And we're certainly seeing an awful lot of feedback from the market that if another biologic does get approved, that there would be an enhanced willingness to actually use biologics at an earlier stage.

And 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. And I think a lot of those capabilities and skills will really enable us to think about how we can actually develop the lupus market beyond way beyond where it is today. And 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 [indiscernible] syndrome. And then the third priority, the third party, I think, is 1 of the most important and often most neglected areas of our industry. And this is some -- this is an area where we have 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. And we were not necessarily very good with that.

We have gone 3 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 6 new programs expected with the 3 NMEs. We've already had 5 INDs this year as Priya will tell you, Biogen in its 48 years history, has never had 5 INDs in a single year.

And our ambition is over the next few years to have at least 20 programs in early-stage development. And this is a big shift in how we operate because Biogen historically has looked at things on an asset-by-asset basis. And 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. And so those are the 3 areas. I think it's exciting. The future of Biogen is the for us.

And with that, I'll turn it over to Priya, who can give us a little bit more insight to the excitement of waiting 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 1 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 folitufolumab 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 Phase III SLE studies for litufulumab in the first half of December. As we turn beyond that, we expect CLE data from [indiscernible] as well as AMI data from salzatumab, followed by a readout from ZorumNersen in Ravi syndrome expected in the third quarter of next year.

Beyond that, we expect to continue our multiyear cycle of important registrational data flow through the end of the decade. Each of these upcoming catalysts has 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 transform 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 an 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, 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. The portfolio now represents approximately 63% and 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 onetime 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 [indiscernible] 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 from emeriti 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. Lakevi end 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 iClick launch and have started to see some uptake in the U.S. Patients can currently access reimbursement for iClick 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 administration starting in 2027 and which should support iClick adoption as we move into the next year.

Skyclaris 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 and 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 and 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 onetime 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. At the EMPAVELI revenue was $52 million, which was up 11% quarter-over-quarter, driven by strong demand for the nephrology indications, 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 dilutive 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 Appellate operating expenses as well as continued investment in our Phase III programs, [indiscernible], felzartamab in AMR, [indiscernible] syndrome and salinersen and SMA as well as support for the U.S. and international product launches and prelaunch 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 Rather 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 [indiscernible] from the Riata transaction and SYFOVRE the 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've 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 appellate synergies faster than expected. 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 prelaunch activities. We also now accept approximately $50 million of acquired IP R&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 remain 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've 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 strengthened 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 the first question, please, Cynthia.

[Operator Instructions] Your first question comes from the line of Phil Nadeau with TD Cowen.

Congrats on the solid quarter. I wanted to ask about the upcoming linafilumab data in SE. I think that is now becoming a focus of investors. Can hydrogen 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?

Priya, do you want to take that one?

Sorry. Thanks, Phil. So I think just stepping back, we recognize and acknowledge lupus is a very heterogeneous disease. We studied past trials -- and we've extensively put several strategies in place to optimize the outcomes. And I've discussed those in the past.

And I think to name a few. The steroid tapering, control of background standard of care meds. So I don't really have anything new to add to those strategies. We remain very close now both of them being disclosed in the first part of -- first half of December. So I'll just stop here and we look forward to seeing the data as well.

Your next question comes from the line of Chris Schott with JPMorgan.

Just a question on fulzartinab. I know you mentioned this a bit in the open remarks, but assuming positive data in AMR, can you talk a little bit about how you're thinking about the rate of market development and the ramp of the product. And again, maybe just to spend more time in this market. Just comment maybe a bit on how -- the Street is modeling this? And do you think the Street is kind of getting this right in terms of how big of an opportunity this could be.

Chris, this is Alisha, I'll take your question. So 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. But 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.

And I have to say that they were very enthusiastic about sells of 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 products, several of those patients will already be too late in their progression, but there's a very large cohort that will -- now currently, AMR will be treated in transplant centers and transplant nests see themselves as stewards of the graft.

So the interesting thing about this space is we know exactly who will be treating the patients. It's about getting the patients in there. The 1 thing that we've learned from EMPAVELI now that EMPAVELI has been working with transplants, is that in a lot of these centers, you have to be on protocol. Now I mentioned 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.

So 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. So typically, transplant patients are with the transplant center for approximately a year. They go back to their general Nets.

General mats are actually very good at monitoring for AMR. And they're also pretty good at already referring them into the transplant centers. So that system, though it's not perfect, is already there. So we know that we were 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.

And so 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. And then for general NAVs, it's around how they consistently diagnose and do surveillance for AMR and ensuring that they refer them earlier versus later.

Now 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 Fels is going to have for patients. And when you think about pricing for the product, also keep in mind the dosing of felzartamab.

For example, in AMR, in year 1, they will have 12 doses. In year 2, they have 6.5 doses. So you're also going to see like what we saw with SPINRAZA, that first year is we were 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 MDI.

Now we view MDI as incremental to AMR rather than a separate commercial market. And now that we've done more work on it, we can understand that physicians are also looking at MBI. We believe that this gives an additional 30% on top of that patient population of AMR. So the biggest opportunity for MBI will be for raising more awareness outside of [indiscernible].

Right now, KMs understand it greatly, but it's currently an underappreciated disease that we have some time to work on, but we've already started those conversations.

Your next question comes from the line of Brian Abrahams with RBC Capital Markets.

Congrats on the quarter. Maybe another question for Priya on [indiscernible]. 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, 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. And 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. .

Your next question comes from the line of Umer Raffat with Evercore.

I wanted to focus on the SLE trial as well. Priya, when I look at the Phase II data, 1 thing that stands out on the SRI-4 endpoint is that the entire delta this entire separation versus placebo was driven by sort of 1 subcomponent, which is led to 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 [indiscernible] driving it or additional components as well? And will you be in a position to pull data across both studies by interferon high subgroup, if needed, because there's other companies in the space commenting on that even in a scenario where 1 of the trial does not hit stats.

Yes. Thanks, Umer. I think just stepping back, I think we believe that SRI-4 is the right primary end point when we designed the trial, given that our focus is on skin and joints and how it kind of measures outcomes. So I think 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 pull and what aspects of these trials should be combined.

And 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.

Your next question comes from the line of Salveen Richter with Goldman Sachs.

Could you speak to how much of an increase in commercial injections for SYFOVRE due to reducing free drug use versus demand? And 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.

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. So we identified that as a potential area of improvement before we had even acquired them. The team has done a nice job of that. .

But 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 sewing lesion progression. In fact, I went to 1 of their large conferences and met with many of the PE firms and with the retina specialists. And the sentiment they say across the board has improved quite a bit. and they are now more willing to do more injections.

And so these commercial injections are coming from also more HCPs that are coming on board and more depth of prescribing as well. Now I have mentioned before that the discounts 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. And 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.

And 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. And so 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.

And when you talk to the retina specialists, they don't actually realize that these patients have dropped off at month one. So 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.

And we noticed that because they were in DTC a while ago for SYFOVRE. And actually, the results of it was very good, saw a direct impact into patients going in and requesting the product. And then for whatever reason, they have, of course, stopped it. But now that they are in Biogen, we 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, and we hope to launch the next year, and we do believe we'll drive even more patients into doctors' offices.

Your next question comes from the line of Michael Yee with UBS.

Maybe just a question on the cutaneous lupus readout in the first half. Maybe you could just comment prior Chris, on your confidence in that indication in that program versus the systemic indications, which I think people would view as a little bit higher risk and thinking about either the target, which is different than dapolizumab, for example, and just your overall confidence in that study, I know you appreciate your [indiscernible] 1 study here versus systemic 2 studies. So just wanted to think about how you are framing the cutaneous readout.

Yes. 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 in -- from LiLAC in Phase II, we see that the drug has activity in both forms of the disease. I think just stepping back, it's too close really now, and I don't want to speculate, so I'm not going to really talk about confidence.

We know that systemic lupus is generally more heterogeneous. So I think that's 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's easier to kind of visualize and see impact.

So I'll just stop there. But I think, overall, we believe both are important, high unmet needs, and we're going to see data in both these indications, and we have seen data in Phase II. So we'll wait to see what we get in Phase III.

Your next question comes from the line of Alex Hammond with Wolfe Research.

So for SPINRAZA high dose, can you characterize what levels of conversion you see in the United States and at steady state where you expect this to fall. As a follow-up to, does it give you confidence on the commercial dynamics for salinersen, assuming a positive Phase III result, I think, in '28.

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's actually SPINRAZA high dose. And 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's coming out -- they know every physician and when they want something, they ask for it. So a lot of what you're seeing with SPINRAZA high dose is really coming from the community, pulling it and asking doctors for it. And 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 and all of the launches across the board have been successful.

So 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. And we know that 50% have now been dosed to the product. That means that they've pulled forward quite a few of these patients. And clearly, we're 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 aren't as many patients that will be getting that onetime benefit of the 90,000 that you're seeing this year with every transition dose.

Now the other thing that we are seeing, and this is also across all regions is that you're seeing patients come back. So they've been on SPINRAZA. They went to a competitor, and then we call that a switch back. So we have seen a portion of the patients switching back. We've also seen a portion of patients either being dosed right before there's old gens or after Zolgensma.

So there's a market there that we will be looking at next year on switchbacks and on new patients that will go beyond the transitions. Now with that being said, what's our goal of SPINRAZA high dose is to maintain the patients that we currently have, especially as we approach a potential launch of salonersen, which I have to say, the community already knows about salinersen 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.

Your next question comes from the line of Paul Matteis with Stifel.

I wanted to throw one in on zuvenorsen ahead of data next year. Can you talk about the work you've done to garner conviction in pricing that drug at a premium outside of the U.S. where antiepileptic medicines are generally not that expensive. And as it relates to the thesis there, how core to that thesis is actually showing a static effect on cognition in the Phase III DRIVE study?

Yes, Paul, I think the -- there is opportunity to reprice this market. And the real differentiation is the impact on cognition, as you said. So as we -- I think we've already talked about that this is a 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. And I do think we have a pretty compelling proposition to take to payers in Europe.

Your next question comes from the line of Evan Seigerman with BMO Capital Markets.

Always congrats on the really nice progress. I want to touch on [indiscernible] just given the growth we're seeing there. In the field, what's the feedback from both patients and providers regarding iClick. Are they -- is it driving the uptake that you would hope it would have? And then thinking ahead to next year, what else can you do to expand the market and continue the growth.

Thank you, Evan. This is Alisha. Very excited that you asked about what can be [indiscernible] I think first, I would like to address, if you don't mind Part D because those are the questions we had quite a bit over the last couple of quarters. And if you have been able to look at the published formularies already, you're 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're very pleased with where we are with Part D. Also keep in mind, it's an open enrollment right now. So I can't actually tell you the total lives because 30% are still flux. So even though we know of 50% now, we do believe that we will have greater than 30% 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 iClick is performing, I think that what you're going to see is it's really reframing the convenience conversation. And this is actually a critical moment for LAC to become more accessible and easier to start for patients. And in the longer term, which we've said before, we believe iClick is 1 of the only things that we have that will actually grow the market in general for the entire class.

Now if you look at DBD data, which I know many of you buy, it doesn't have a great capture rate. It is going to show really astronomical numbers for how they capture it. I'd say, don't look at iClick eyes for the DBD data. But when you do look at how it's performing in market and you compare it to, let's say, the LEC IV launch or Casinla, iClick Eye is outpacing the LECIV launch by 3.5 and Kasumi by 6 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 embolus of patients. However, the interesting thing that we are seeing that we haven't seen before, I click, of course, the majority you're going to see come from Lacombe writers and also dual writers.

But we are now seeing writers who have never written in AAT before, never written cast, never wrote like IV, they're writing iClick, and we are also seeing physicians who have only ever written Cassia right click. And so you're starting to see a dynamic change, especially in areas where there's long drive times. For example, the fastest uptake that we have is on the West Coast, where you're seeing really a lot of space and geography. And you're also seeing the convenience factor happen as well.

And so with that being said, I think that this year, right now, it's outpacing what our were. It is early days. And as you look at next year, I think that we're going to see that subcu has now become a really tremendous option for both patients and physicians. And for physicians to write it that have never written in AAT before is a very good signal to us that this can be very promising for next year and the years beyond.

Your next question comes from the line of Geoff Meacham with Citi.

For the question. bigger picture 1 for Chris. It 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 fultartinib development, for example, more commercial investments in SYFOVRE or EMPAVELI Pavel or staying aggressive in [indiscernible]. Just want to get kind of the internal to external balance from you looking forward.

0 Yes. Thanks. Well, there's no question that if -- obviously, we have to wait until the clinical trial results, but we are looking at these 10 Phase III launches or 5 NME launches. Now part of the rationale, remember for acquiring Apellis was already to acquire a commercial team for felzartamab.

Now 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 zorvinersen, I think, is really a limited population that's going to look a lot more like a rare disease and salinersen 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 continued investment in R&D. But equally, I think investors have waited a long time for us to grow. And so we're going to be very mindful of different ratios and the amount of investment versus growing our bottom line. But -- and 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 is 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. And so we're looking a lot at D.C. to Phase Ib, I would say it's probably our sweet spot.

We've been fairly intentional about M&A over the last 3 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 1 of our existing franchises One of the things I'm quite mindful of is distraction.

We have 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, it will be we're looking at dermatologists and rheumatologists. We're looking at potentially epileptologists with reserversen.

So that's 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 3 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.

Your next question comes from the line of David Amsellem with Piper Sandler.

So wanted to ask a commercialization question on lidafilimab, and I realize that might be putting the cart before the horse here, given the data readouts. But 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 it's a much -- there's a dearth of treatment options, of course, there. So how are you thinking about sizing in terms of the 2 opportunities? And how distinct do you look at these 2 opportunities?

Thank you. This is Alisha. I think, first of all, the way in which we view these is they are separate opportunities. So 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 totals 300,000 patients. When you also look at CLE, the way the team has phrased it, the CLE is life-changing for a patient and 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.

So 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. So 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.

So we want to make sure dermatologists have the empowerment and that they treat early and urgent and 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, and 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.

And 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. So we do look at it a little bit differently than we look at SLE.

Your next question comes from the line of Danielle Brill with Truist Securities.

Maybe I'll actually ask one on IgAN. So with the FDA now open to a 1-year eGFR endpoint and the April as agents becoming the standard of care, are you reconsidering design, including the 2 years on placebo. And then if you do shift to a 1-year eGFR endpoint, would the trial still be adequately powered?

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 EGFR really provides a more clinically meaningful measure of long-term renal outcomes. So 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 and IDM.

So we're going to -- we're 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 [indiscernible]. But 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.

So this continues to be a very important differentiator or felzartamab in IgAN. So we'll continue to keep both those aspects in mind as we reflect these updates.

Your next question comes from the line of Mohit Bansal with Wells Fargo.

Congrats on the progress. Just trying to understand the guidance a little bit here. If I do like a plain math of like 5% growth, assuming that's what you mean by mid-single-digit growth and subtract the 9 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 talking, but what are we missing? Because it seems like a lot of drop from third part to fourth quarter. So to understand how you are thinking about it.

Yes. So thank you for the question. So when you look at the Q3 results, as I noted in my remarks, on a top line basis, we noted that we did have the significant tailwind as Alisha pointed out, with the conversion rate on SpinHD. And so we saw a pull forward of conversions that we expected to occur in Q4 to the Q3 time frame as well as some of the inventory dynamics I mentioned as it related to [indiscernible] and some of our other products. So from a top line perspective, we had this positive pull forward. The guidance update and where we've landed is 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 appellate 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.

Your next question comes from the line of Andrew Tai with Jeffries.

So on SLE, if litafilumab and DAPI both succeeded. Can you remind us how these 2 drugs would be positioned relative to each other as well as the competing drugs out there? And what would be the reasons to believe why either drug could be used as a first-line therapy ahead of standard of care?

This is Alisha, I'll take that answer. So 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 2 shots on goal for SLE, which we also find critically imprudent. We also believe that they may offer some differentiation.

So for example, we do know that DAP has shown improvement in fatigue and we know 1 of the major complaints from SLE patients is fatigue. Now when it comes to first line, say, 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.

So 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.

And so I also think with the commercial powerhouse that Biogen has been able to create over the last 7 years with all of the 7 launches that we've had, we also believe that the commercialization, how you market the product will become just as important. And so it remains to be seen, but with 2 shots on goal, I think we're going to be able to compete to win pretty well.

And 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 patients benefit from which product at the right time. So I think that will transfer to lupus as well, if we are fortunate enough to have both of those products.

Your last question comes from the line of Marc Goodman with Leerink Partners.

I heard your comment on inventory with Sky Claris, 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. and just give us a little bit of a 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.

This is Alisha. I'll take the first part of the question, especially around the U.S. We're encouraged by our 2026 performance with Sky Claris especially as we continue to grow year-over-year. We do believe we will continue that growth moving forward. there's a couple of 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 1 of the most efficient models that I have seen. And so they've 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 Sky Claris. That is now normalized at a much lower percentage than what we've had before, and we're seeing the discounts continue to sort of 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.

And -- this is Robin, and I'll speak to the ex U.S. dynamics. We expect from a demand perspective that the growth on both the remainder of this year and into next year is primarily going to be coming from the continued expansion of SkyClaris globally. We continue to launch in new jurisdictions, including the recent approval in Brazil. And so that's where the future growth from a demand perspective is focused on.

Thanks, Robin, and thanks, everybody, for your participation today. If you've 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.

All right. Great. Good morning, everyone. Thanks for joining us. I'm Terence Flynn, Morgan Stanley's U.S. biopharma analyst. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Very pleased to be hosting Biogen this morning.

Joining us from the company is Chris Viehbacher, the company's President and CEO. Thanks so much, Chris, for joining us on a Monday morning here in Times Square, but really appreciate the time.

I just thought we'd maybe start big picture here. The company has been very active. -- kind of reshaping the business over -- under your tenure over the last several years. And one area you've been pretty active on is the business development front, including the recent Apellis acquisition. And so maybe just high level, talk to us about capital deployment strategy and how that's reshaped the company and positioned you from a growth and pipeline perspective over the next several years.

Well, good morning, everybody. Thanks for the invitation, Terence. Great to be here. internally, we talk about new Biogen. And that is really what's driven our capital allocation strategy to date. Old Biogen was really very much focused on neuroscience, really moonshot type projects, extremely expensive, long Phase III program, very little diversification and actually quite a narrow pipeline. And in fact, when I first arrived at Biogen, the only physicians we actually called on were neurologists. And today, we're building out a commercial team that's not only seeing neurologists, but also nephrologists, transplant nephrologists, rheumatologists, dermatologists, epileptologists, retina specialists.

So there has been a significant shift in the therapeutic areas of focus for the company. And a lot of that has been driven by the BD and that was very intentional. We did not want to abandon our roots in neuroscience. We continue to work in ALS, in Alzheimer's, a little bit in Huntington's. But having been so long in MS, we looked at MS as a neuroscience business, but the reality is you treat the immune system with MS. And so immunology felt like a logical place for us to go. And there you can do much shorter and more defining Phase II clinical trials. So we were trying to, on the one hand, broaden our commercial areas of focus, but also have areas where we weren't taking quite so much risk in deploying so much capital. We did that with the Hi-Bio acquisition, which gave us felzartamab.

Apellis, although we're talking about kidney disease and eye disease, it's -- these are complement inhibitors and so also in immunology. So -- and immunology is obviously a vast area. Today, we're pretty much focused in the rare and smaller indications in immunology. But I would say today, in terms of allocation, I think we've got an extremely good setup at Biogen right now. We've got 10 Phase III clinical trials that will start to read out as soon as next quarter. that could lead to 8 product launches indications with 5 molecules. And I think with Apellis, we're now we have the potential to really have an inflection in our revenue growth.

And so as I look at capital allocation, I'm more focused on -- we're collectively more focused on our early-stage development. We're -- we think we can grow this business with what we have. And -- but the nature of this business is the day you launch a product, you should be starting to develop the successor product. And that's what we're really doing. So it's going to be preclinical Phase I, Phase II assets.

Yes. Okay. Great.

Which is also the most capital effective time to do acquisitions.

Yes. And what's the market dynamic right now for those kind of assets? I mean, I'd imagine still fairly competitive out there when you think about the profile of things you guys are looking at?

Yes, it is because you're getting a number of assets, particularly immunology, where you've got already where the underlying disease biology is pretty well defined. So they have -- there is some areas of this that are highly competitive. At the same time, we have China coming in. And so the supply, if you like, of early-stage assets has expanded significantly.

Yes. Okay. Great. Maybe before we talk about some of the other therapeutic areas and the diversification, I just want to touch on LEQEMBI. Obviously, still a really important product. for you guys and your partner, Eisai. So maybe just level set us in terms of kind of current market dynamics, how to think about steady state market share and then the subcu induction launch, which I know has been a near-term focus?

And so there's a bit of a paradox with Alzheimer's. On the one hand, we have a huge population with an unmet need, and yet the uptake has been slower than many would have expected. And part of that is really just an enormous change that has had to take place within the neurology practice. This is really requiring a team approach, which neurologists haven't really had to do. I mean, we have to organize PET scans and MRIs and infusion beds due to the cognitive assessment they've had to expand the staff. And before they expanded the staff, was there really enough -- going to be enough reimbursement for that?

Then with the infusions, what we have seen is a number of physicians are carefully choosing which patients will go on treatment. Are they robust enough themselves to get themselves to an infusion center every 2 or 4 weeks? Or do they have a caregiver that can take time off work regularly to do that. And so one of the things that we have been really focusing on is how do we simplify that care pathway. And I think we made a lot of progress on that, and I think we could potentially see an inflection now in the LEQEMBI sales. both in terms of market share as well as in overall market growth. And that's really because we've, first of all, tried to eliminate the PET scan because there's now blood-based diagnostics.

Neurologists love scans because the only time you can really try to figure out what's going on inside the brain. But a PET scan costs $5,000. The blood-based by diagnostics is less than $130. And then the next thing we're doing is really using those blood-based diagnostics to get a better triage of the patients coming in. It's very hard to get an appointment with a neurologist. And at the start, too many people just weren't eligible. Their disease was too far advanced. Now what we're seeing is a lot of use of blood-based diagnostics in a primary care setting. And so the yield, if you like, of eligible patients getting in went from 50% to 70%. And now the last stage has really been the approval of a subcutaneous form. We had that for the maintenance indication last year. Now this year, we've had it for induction. And that's important not only for the care pathway, but also from a competitiveness profile.

I think Lilly's really main argument has been once monthly infusions instead of every 2 weeks. When you have a subcutaneous that goes away. And Lilly does not have a subcutaneous for donanemab. So I think, obviously, now moving to the subcutaneous means moving from Part B to Part D. So the negotiations with the plans are underway, and any reimbursement would be eligible from first of January. So we're not going to really see the uptake of subcutaneous in any meaningful way until we get that Part D reimbursement.

Yes. But you are seeing medical exceptions get processed, right? As I remember from the 2Q call?

80%, I think, are better of all medical exemptions -- formulary exemptions that are requested are approved, yes.

Okay. And so January 1, you're confident in that time line because I think that was a question we got recently, I was could that slip even further? Or you're fairly confident January 1, you're going to have part D access?

Well, Medicare makes all those decisions effective 1st to January. So that won't slip. What we don't know is you have -- there will be some plans that will reimburse subcutaneous for all indications. We got approval in July, so that's theoretically in advance of the announcement in the kind of late fall time frame. So we'll have to wait and see which plans reimburse for both indications or at all. So -- but I think we are hopeful that we can get decent reimbursement on 1st of January.

Okay. Would we know for sure, by your third quarter call, like in October, is that a reasonable expectation to think about when you might have full visibility there?

I think it might be. I think they're usually in November, so it might [indiscernible] bit. So that's all in the hands of the plans -- they have to get everybody to sign up for these plans in the fall. So it's usually -- it's usually in and around that time frame.

Okay. Okay. Great. The other -- there are 2 other focal points in terms of Alzheimer's. So Roche has a brain shuttle approach that they're using, which it looks like could potentially lead to lower rates of ARIA. So first question is just how do you think about potential competitive dynamics, if that does play out? And then anything you guys are doing on kind of a similar vein to try to further improve the ARIA rates with LEQEMBI?

Well, first, I mean, trontinemab is not coming to a neurologist near you anytime soon, right? So I think that right now, I think it is these 2 molecules that are really going to be the ones in the market for probably the rest of the decade, I mean as far as we can tell. And I think what you're going to see is actually a lot is going to really depend on these early treatment studies that are coming out, which have, I think, the potential to completely redefine the market. Lilly has their trailblazer -- I think it is a study that might read out as early as next year. We have the AHEAD 3-45 study, which are probably the more definitive studies in early diagnosed patients.

One of the things that has always been there is what's the level of efficacy. And actually, the level of efficacy of these drugs is wonderful. I mean, we clear the amyloid plaques. The question has always been, for who does that make the most difference? Because this is a disease where you're killing off neurons and harming synaptic function. So it seems logical that if you can treat patients before you've lost too many neurons that they should do better. And in fact, we demonstrated from a study of low towel patients that when you got -- and that's really a marker of early-stage patients. In those, 70% of patients, 70% were stable on disease over 6 months. No further decline. And in fact, 60% actually showed some improvement. So that says that really, if you can get to patients earlier and the AHEAD 3 study is looking at people who have almost no amyloid buildup because Alzheimer's is believed to be an amyloid driven telepathy because it's really the tale that determines the severity of the disease.

So AHEAD 3, we'll look at the hypothesis. Well, if you can stop the amyloid buildup above a certain threshold, you may never get Alzheimer's. And the AHEAD 45 is looking at those patients who are yet -- do not yet have symptoms. But if you could actually stop the development of amyloid at that point, do you either prolong this so that maybe the patient dies or something else or lives longer or maybe also never gets the disease. And though -- and then, of course, we have tau coming along with diranersen, and there's going to be a whole interplay of where's amyloid and tau. And the whole reduction of ARIA is going to be interesting because the hypothesis has always been that as you remove the plaque, that's what caused the ARIA.

But if you're in early-stage patients, there is at least a hypothesis that ARIA may not play a role anyway. And so certainly, as Biogen, we plan to be in both these areas. We are looking at the next generation of A-beta. We are right now in the lead on tau. And I think you'll see a progressive increase in this market. The number of people over the age of 65 continues to grow and the percentage of the total population of people over the age of 65 continues to grow. So the unmet need is only going to grow in Alzheimer's.

Yes, for sure. You mentioned, I think Willy has guided to having their data from TRAILBLAZER-ALZ 3 next year. Any update in terms of timing for the AHEAD 3-45 program that you can share?

That one is fully recruited, and you just have to wait the time for follow-up. One of the problems of this is we don't really know how fast Alzheimer's really develop. So even if you retard the growth of amyloid beta, how long does it take to really show a difference. So we have 4 years that we're looking at. So you have to wait for 4 years, basically. I mean this study started in 2020, and it will read out in 2028. That's one reason why we also decided to diversify the portfolio of the company. You can't be doing studies like that all the time.

Yes. Last one before we go to the lupus portfolio. It just is a positive readout from TRAILBLAZER-ALZ 3 good for AHEAD 3-45. And is the converse also true are there differences that limit read-across potential? Because again, before your data, everyone is going to be focused on Lilly's data and what does it mean for Biogen and e-size program?

Well, we're certainly cheering for Lilly that they succeed, but there are differences in the endpoint and in the patient population that they're studying. So a negative study, we don't think would necessarily read through to AHEAD.

Okay. Moving on to lupus. So litifilimab, you have some upcoming Phase III SLE data expected in the fourth quarter from 2 studies. And then you are running also a CLE study that's going to have data in the first half of '27. So maybe first, just help us set expectations for the 2 SLE studies that are coming out here in the fourth quarter. What are you guys -- why are you confident in success? What are you hoping to see?

Well, I think if people are nervous, it's really because this has been a graveyard for a lot of molecules, right? I mean this is, first of all, a very heterogeneous disease. There are some specialists do even question whether this is a single disease. But there are different joints involvement, different symptoms. I've seen numerous patient panels where one patient will say to another. My lupus is not your lupus. And so trying to find an endpoint that covers all of those things.

The other is that people are -- have situations of flare and then they have remission. You've got the utilization of steroids. So there's always sort of some level of background therapy in placebo. And so probably the most important thing is really the patient selection coming into the study. Clearly, our teams have learned from others. You may recall that SAPHNELO of its Phase III did not work, and that was largely related to the use of inside, I think it was in the group. And we have, for instance, already controlled for that as did SAPHNELO with their second Phase III.

The other I would say is we faced exactly the same situation with multiple sclerosis. There's also heterogeneous disease. It's something that you treat over a longer period of time. One of the things that's coming out of market research, for instance, now because this is a market that should be the same size as MS, but it's not today. And one of the problems has been the penetration of the biologics. And it's not really somewhat just a fault of the biologics. It's if you're going to treat patients over decades, which is the same thing for MS, you want to save the big guns, if you like, until you think the patient is more serious. So there's been a reluctance to use the biologics because they've only got two. So our brief is that as physicians have more treatment options, first of all, that, that market will grow. And a lot of this is going to be which drug is right for the right -- for this patient at which time.

And again, this was exactly the same thing that we went through with multiple sclerosis. There is a heavy predominance of this disease in women and also in African-American women. And again, this is an area where we have a lot of experience, not only in MS, but also in postpartum depression. And that requires a different outreach. So I do think one is we have to make sure that the studies actually read out. But again, I think we have been able to learn from other studies and from our experience. And then from a commercial point of view, I think Biogen is uniquely positioned to really try to build this market. And then, of course, we have the cutaneous lupus coming in, in Q1 of the next -- first half of next year, I think it is.

Yes. What -- and so what do you think about, I guess, SAPHNELO is a precedent on positive study, one negative study. Do you feel pretty comfortable that even if you had a similar result, you'd be able to get approval in SLE on kind of a mixed bag of data?

You prefer having both, but there is at least precedent. And then you also have CRE. So you've got multiple shots on goal here.

You mentioned CLE. I think Phase II, obviously, is next year, but I think there's going to be some 1-year data at the European conference coming up here later this year. thing we should focus on that data set as we think ahead to the Phase III data next year?

The cutaneous lupus is an interesting one to study. First of all, there's -- nobody has been actually approved yet in just cutaneous lupus. Now the distinction is a little bit -- it's really a function of which physician is looking at it because you do have patients with SLE that have some skin engagement, where there's a greater preponderance of the skin engagement, then at some point, the patient gets referred to a dermatologist. So if you like, I think as we look at the segmentation of the market, we know we're going to have to see rheumatologists for SLE, but there might be some cutaneous there, too. And certainly, when you go to the dermatologist and the cutaneous lupus is is more predominant. And that is single organ engagement, and it's also very visible like many other dermatological conditions. So I think the read-through on a Phase II should be although given recent events, you can't be sure of any Phase III, but I think there's a reasonable expectation that there's a high probability of read-through from the Phase II.

Great. You touched on some of the commercial dynamics already, but maybe the related question is just the build of your own team. Where does that stand? Is that more of a end of this year into '27 dynamic as you build out the lupus sales force and footprint there?

So we have started already. Really starting on the medical affairs functions. We have been busy building out that and in all areas, in dermatology, rheumatology, nephrology, epileptology. That will continue into next year. Most of the commercial build-out would be closer to the actual approval. The good news is that for most of the conditions, particularly in the rare diseases, you don't have a huge commercial team to build out. And in lupus, I think we still have some people involved in multiple sclerosis. And so we think we might be able to move some of those, but particularly in the U.S., we might be able to utilize some of the same people for lupus.

Yes. And maybe just remind us, I think you framed the opportunity as an $8 billion market for lupus. Is that...

Worldwide, yes. I mean, if I look at the -- I think the MS market is $25 billion or $30 billion. If you look at the actual epidemiology, it's that size. Now nobody is really jumping to that number yet because it's going to take some time to really get the penetration of the biologics. But I think we look at this as much as a market growth opportunity and a market share. There's going to -- there's so many patients, and it's so heterogeneous. I'm not really too worried about the competitive dynamics because it's going to be which patient for which drug. And it's exactly the same dynamic we saw in multiple sclerosis.

And the other is, is that we're going to have multiple shots on goal on this. We have litifilimab, but we're also partnered with UCB on dapirolizumab, which has already demonstrated on positive Phase III complementary mechanisms of action. And then we have an IRAK4 degrader that has entered the clinic. And so we see doing the exact same strategy as we did with MS, which was to have a portfolio of products that are applicable to patients at various times in their disease journey.

Great. Maybe we'll pivot over to one of your other late-stage pipeline assets, felzartamab. This is pretty interesting as you got from Hi-Bio trial ongoing in AMR. We're going to have data in the first half of next year. So I know you had some pretty strong Phase II data that were generated. So maybe just help us think through, again, what's the bar for success here as we look ahead to this next key readout after lupus.

Yes. Maybe before we zoom in, I mean, just on a macro level, I mean, I actually fell in love with immunology when we were developing DUPIXENT years ago when I was at Sanofi. These are multi-indication assets. You're essentially following a biological pathway, a cascade of the immune system, and that can lead to multiple different indications. So on the one hand, that is highly capital efficient because once you've established the safety in one indication, then you can rapidly go into other indications. Now the tricky part of that is that you're going to have a broad array of things that you have to do on the commercial front, which is exactly what we had to do back in the days of Sanofi. And here, we're talking also about an asset with multiple indications.

Initially, the first 4 really are in kidney. You've got AMR, you've got IgAN, you've got PMN and you've got MVI, which is basically AMR, except that you don't have any donor-specific antibodies. But we also are looking at 2 non-kidney indications and initiating clinical trials in those. And we have a follow-up to that with the CD38. And the reason we're particularly interested in the CD38 is that one of the things when you're in immunology is you have to always be a little bit careful. I mean you need your immune system. And generally, what we're trying to do is tap down the immune system. But when you do that, you potentially expose people to opportunistic infections, for example. If you take CD20s, great B-cell depletion, but hey, you need those B cells sometimes.

The CD38 is really precision immunology. We're going really after 2 things. One is the plasma cells that produce the autoantibodies, but we also have these natural killer cells or NK cells. And so we're actually only affecting the immune system as it relates to these rare kidney diseases. And we leave the rest of the immune system intact. And the other thing that is quite interesting about that is we seem to have something that feels disease-modifying at least for a while. Because when we look at IgAN, as an example, we'll go through a process of 9 infusions. And then we were able to maintain the effect over 18 months with no treatment at all. Now how long that lasts is something that we'll be testing in a Phase III clinical trial. But to us, that gives us a lot of competitive advantage.

Now the first one is antibody-mediated reduction. There are about 11,000 patients in the U.S. if you look at the waiting list for kidney transplant, you're going to find that quite a significant percentage of people who've already had a kidney transplant. In fact, we've had patient panels where we had one woman who's undergone already 4 kidney transplants. And it's a very worrying thing for people. So the Phase II study showed that we had an 80% resolution of that. Now smaller numbers, we have to replicate this in a Phase III, but we will be the first to market in this. And the other interesting thing about this molecule versus even some other CD38 is that we're not really we're not really agonizing the complement immune system as some do. And if you're already trying to fight in autoimmune, you don't want to fire up another part of the immune system. And that seems to be unique to this molecule.

If you look at the pricing, most recent pricing in IgAN, I mean, if you just took the IgAN pricing, there's about a $3 billion to $4 billion market opportunity in the U.S. alone. Now the interesting thing is that there's a different treatment regimen for AMR than there is in IgAN. So we think we can actually price AMR for a rare disease while still having a competitive price in IgAN. So the opportunity in AMR could even actually be even bigger. But we'll have data for that in the first half of next year as well.

And how do guidelines work at transplant centers? I mean, how important are those as you think about the rollout of this product. As you said, it's like there's a lot of people on the transplant list, I'm sure they're focused on rolling this out as quick as possible to people if it is successful. But did guidelines play a big role in terms of what the uptake curve could look like or any other constraints that we need to think about for this launch as you roll it out, if successful?

Guidelines tend to always follow. This is one where I think the unmet need is very significant. We know where these patients are. And one of the benefits of the Apellis acquisition was that we are now commercializing actively a nephrology product with EMPAVELI. And so we're actually already seeing the nephrologist. We're in -- there isn't a complete overlap between EMPAVELI and AMR, but there are also EMPAVELI patients, some of the transplant centers. So we know where all of those folks are. We're building -- we have a medical affairs organization. This is one where I'm challenging our team, I think we should be able to see quite a rapid uptake. But we'll have to wait and see exactly what the clinical trial data show and what the label is. But that one should be, if all goes well, that should be a relatively rapid uptake, I think.

Yes. Okay. The other one, you touched on this a little bit, but maybe just expand. So if the AMR data are positive, what are the lateral implications for IgAN, PMN, MVI, is there a direct read through to those or are there nuances but how do you think about likelihood of success of the kidney indications in the event that the AMR data are positive?

Yes. So I think actually -- well, it will be a read through, we think should be a read-through for MVI, Although, again, MVI is there's 2 things that could drive the rejection. One is the donor-specific antibodies that you inherited with the transplanted kidney, but there's also your own immune system. And so MVI is really -- it's your own immune system. So there should really be a high probability of success, again, is science, and you really want to see the data first. On IgAN, I think the interesting thing on IgAN is I think if you reduce the proteinuria in the Phase II, hopefully, you can do that in the Phase III. I think what we're going to want to see is replicating this disease-free or this treatment-free period because I think that could be really where we compete. IgAN has become a heavily competitive space. But at a global leadership conference we had at Biogen, we had on the table for everybody, the number of drugs. We had a little dish of all the drugs that these patients are taking.

And I've been in this business a long time and done a lot of market research. People define good health as being I'm not taking any medications. And so if you have a treatment-free period, we believe that, that is an enormous competitive advantage in the IgAN space because everybody is going to have roughly about the same proteinuria, then you've got EGFR that could play a role, and we'll have to make sure that we are competitive in that space. But I think it's really going to be the -- not just the convenience, but the psychological benefit of saying, "Hey, I think I beat this thing."

Yes. Okay. Great. You mentioned part of the Apellis acquisition was the access to the renal sales force. And so maybe just give us the latest on kind of how to think about EMPAVELI growth, but also SYFOVRE here as those are kind of the 2 key commercial assets you also brought in-house. I think you guys have guided to mid- to high teens growth. Just should we expect that to continue into next year?

Yes. So one of the -- there were a number of drivers for this. We will -- and we were always upfront about being intentional about doing M&A. Our MS portfolio has been very resilient, but it's clearly not other than VUMERITY, which still has exclusivity in which we're still investing and seeing growth in it has been a declining business. And LEQEMBI did not initially take up the slack, although with LEQEMBI, but also with SKYCLARYS and with ZURZUVAE and Cofal-D, our growth brands are now at least outpacing the decline in the MS business. But we've been more or less flat over the last 3 years. We stopped the decline of revenue and profit. But when I looked out into the future, it was still going to be -- when you launch a product, they're not immediately profitable. And it's just not healthy for an organization not to grow. You need growth in the company. You -- it really was what drives a lot of the energy, but it also drives discipline and most of your metrics work best when there's growth.

So we did need to get back to growth faster. But we didn't want to just do it just by the growth. We want to have something that was strategic. Immunology, like I said at the outset, has been a core part of where we want to go. This is a complement inhibitor. So that is into -- again, this is one of these ones. It's a single molecule that's in kidney. It's in a rare blood disease and it's also in eye disease and that's very much in line with what we're trying to do. And all of these products are early in their growth cycle. All of these have intellectual property protection for quite some time.

SYFOVRE, we, I think, are off to a good start. We did a lift and shift of the entire commercial team to avoid some of the distraction that causes a dip in sales. And I think you saw in the second quarter that actually if anything, growth actually accelerated a little bit after the acquisition. And I think we can keep SYFOVRE growing. I think when we did the acquisition, we said that we had about the same internal forecast as the Street, which is kind of mid-single-digit growth. but the company wasn't valued on that basis. I mean investors were a lot more pessimistic. And if anything, I would say we're actually a little more optimistic than when we acquired the company on SYFOVRE. It's still a competitive dynamic, and we will need to still invest in the growth of the marketplace. But I think we're encouraged by what we see near term.

And EMPAVELI gets us into the nephrology office. I mean if we hadn't done that, we just still invested in medical affairs, but we wouldn't have had a commercial team until we actually got approval for a product. So today, when we go to a we were at a nephrology congress and it just happened that the Biogen booth was right next to the EMPAVELI booth. And so we can literally just do a geographic integration right there at the Congress. And and that makes a difference. And you have different interactions and you've got a every single specialty is different. One day when I retire, I'm going to do a book on the taxonomy of each of these different medical specialists. And you can't underestimate that. The neurologist is different than the oncologist, it's different than the cardiologists and the nephrologists. And this gives us the ability to understand how nephrologists work, how their practices operate build those relationships of trust.

And so one of the things which we did not value in our equation, but which we saw as a benefit to the acquisition is potentially a faster uptake of felzartamab by having that team in place already.

Great. Well, I think we're up against time, Chris, but always a pleasure. Thank you so much.

Thank you Terence.

Awesome. Thank you very much. Thank you, everyone, for joining us today. Session 2 for me. So we have Biogen management team with us today. We have with us 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.

Thank you for having us.

Great. So I think I'm hosting you for the first time at the Wells Fargo conference. So again, thank you very much, you and Tim and the IR team basically for making it happen. So Robin, it has been 1.5 years for you as a CFO of the company, and a lot has changed at Biogen in those 18 months. So from your lenses, where do you think Biogen has done really well in those 18 months or so? And where do you think that you see the room for improvement as there is always a 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 8 years, but in the CFO role just over 1.5 years. And it's really been an exciting time under Chris' leadership. And 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.

And so when I look at the really significant progress we've made on a number of fronts, the first would be that 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. So 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 and then really taking that updated and revised pipeline and pulling programs into Phase III.

And so we now have 10 Phase III programs, and those begin reading out here in the fourth quarter. So we're really -- the pipeline is at a pivotal point for us from a growth perspective. And really deploying capital in 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.

So amidst all of that, we're really continue to be focused on managing the OpEx, making sure we're also delivering growth on the bottom line. And I said that's a bit of a tricky thing when you're investing in the launch products, but also deploying capital into the pipeline, but that continues to be an area of focus for us.

Got it. And I think I just go back to, I think, 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. And it kind of coincided with you being the CFO of the company as well. So for both of you, this question is that you did trim some pipeline, you prioritize some assets there. So what was the philosophy behind like what is the guiding principle there that these are the assets we will take forward versus these are the assets you'll churn here?

Yes. So I have 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. But also, we were at a pivotal time where we needed to redeploy investments from the MS portfolio to the 4 launch products, including LEQEMBI, SKYCLARYS, ZURZUVAE. And so the process of doing that was very much a holistic contribution by everyone in the organization to make that pivot, but it was necessary in order to have the capital to put towards deploying towards the launch products.

And 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 and really making sure that we're advancing those 10 Phase III programs where we are really focused on making sure that we're bringing those to market and that they're set up for the highest level of success.

Got it. And there's another thing which I have noticed that like it was like an over-indexed company to neuro to like, I mean, now you are more I&I and all that. So that is also part of that just to manage the overall riskiness of the business probably.

Yes. Chris, very -- 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 and diversifying in areas that -- where we believe we have a right to play rare immunology. And maybe I'll hand it to Adam because he's been the architect behind finding these wonderful assets for us to put into the pipeline and to put us on that trajectory.

Thank you. So Chris joined Biogen just over 3.5 years ago. I joined about 6 months after that. And one of the early conversations was how do we diversify outside of neurology. Historically, Biogen had taken the hardest path possible, 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. And so we said to ourselves, well, we can do that in some instances in certain areas, but we can't do that across the portfolio. So 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.

So 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 then eGFR is a very well-recognized full approval endpoint. So with the HI-Bio acquisition, brought us felzartamab, that was our entrance into nephrology, but the overall risk profile there is very different, and then we leverage that opportunity across 4 indications within nephrology. So we can -- you can see that there's 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. So glad that you mentioned felzartamab, a HI-Bio drug. So 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. So if you had to rank like AMR to IgAN and all that, IgAN is a little bit more competitive and membranous nephropathy is there. So how would you rank them? Like how would you think about the 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's 11,000 patients in the U.S. that have secondary rejections for their transplantation. It's a very, very significant health care burden. And so we see felzartamab in EMR, 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're actually seeing very robust pricing.

So we're able to actually anchor felzartamab at a high price into a well-defined high unmet need indication. And that data will replicate the Phase II data that was really transformational in terms of the ability to save the grafts and save the transplant. So a really unique opportunity. From there, we can expand into IgAN, PMN, MVI. 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.

So we think that actually in IgAN, for example, which is younger patients, that's an attractive profile where you have your administration and you have a drug holiday, you track disease and only redose if disease recurs. So we think that's an interesting value proposition that's differentiated. And then felzartamab with CD38 has the opportunity to explore non-nephrology indications, and we've launched 2 additional proof-of-concept studies in Phase II. So we see really a broad scope exploring not only nephrology but also CD38 as a mechanism for autoantibody-driven diseases. So 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 2 indications are those?

We've not disclosed those just yet.

Okay, got it. 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. 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. So one question I have is that like -- so when I look at your P&L for next 5 years, I mean, projections and all. OCREVUS royalties still contribute a meaningful portion of the profits right now. And 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, salanersen launch, HD, SPINRAZA and all that. So I mean when you think about 2028 to '30 time frame 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? Like it's not a patent cliff in a traditional sense, but it is kind of a cliff on the P&L. So how would you think about -- how would you make us think about that?

Yes. First, I would focus on the full breadth of the Roche/Genentech relationship. So we have the right -- we have our royalty associated with OCREVUS. So I'll touch on that one first. So there -- they recently launched the subcutaneous version of OCREVUS, and they've had quite good traction on that. So if you think about the time frame around when folks are thinking about this or trying to project that, we're going to be at a higher level given the subcutaneous in the transaction there, the exit at the point of the entry of the biosimilars. So exiting dollar revenue ramp.

In addition, we have -- through the profit share, we have rights in RITUXAN and GAZYVA. And GAZYVA, actually, they've had the approval, both in the U.S. and the EU 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 on the -- at the point of the step down on the OCREVUS.

And then I would say the work that we've been talking about having done over the course of the last 3 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 is we're having really great infiltration of that across the patient population. And so that's 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.

And so then across TYSABRI, we've had good resiliency there, which has been important. And then very importantly, the transaction that we did with Apellis added 2 additional commercial products to our portfolio and increased diversification top line as well. And so the breadth of our product offering and commercial products is quite different than it was 2 or 3 years ago.

Got it. Completely makes sense. So why don't talk about a 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're still digesting this, the durability part of it. So what could we learn in the next 12 months in terms of discontinuations, persistency and all those aspects that will help us like get more comfort around this?

Yes. So if we just think about the geographic atrophy market, it's a very large market, but very underpenetrated. So 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. So we're looking at both adding new patients, and we're 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. And because this is a treatment that you don't see an immediate visual benefit, you've got to continue to educate the patient for the need to be retreated. And so we're doing a lot of work commercially around how do we ensure persistency. So 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. So 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. And then the financial side of the question here is that you did talk about at least $250 million of run rate synergies by the end of '27. So how much of that is already locked in versus depending on execution? And then like what would make the numbers to move higher or lower here?

Yes. So as it relates to 2026, so 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. So 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.

And 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. And so the sales and medical organizations are essentially being left intact. So our optimization activities are really in that R&D and G&A area.

Got it. Very, very helpful. And then -- so 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. So 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. So the biosimilar essentially entered in the first quarter. And 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. And so we have long-standing relationships in regards to that, supported by our patient services organization, which is, we think, part of our special sauce. So the team of folks that are part of that patient services organization really have a high-touch relationship with both patients and HCPs and long-standing relationships from the point that the patients come on to the 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. So 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 a 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. So 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 like this is always the case, not just Biogen, specifically the case with every company that the legacy products always have higher margin versus the growth portfolio. So especially in the case of LEQEMBI and also, like 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?

Yes. So 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. And we had very exciting results in Q2 where you could see the growth portfolio, even excluding the 2 products from Apellis exceeded the legacy MS portfolio. And so 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. And so even beyond the U.S., your pricing ex U.S. tends to be in closer and parameters to the U.S. pricing just because of the nature of the areas we play in. And 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 than the commercial area -- the commercial investments that you had to make in neurology or MS. So 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, the fact that you can have a sales and medical base that is more agile.

And again, part of the reason that the Apellis transaction was really a good transaction for us is helping to be able to leverage that infrastructure as we enter into new spaces with felzartamab. So we look for optimization in how we're diversifying our therapeutic areas. But also as we think about the areas that we 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. So you seem to have turned a leaf there with like HD, like even like before we get to HD, like I think SPINRAZA's decline has been arrested a little bit in the last few years. And then now HD, you are saying that you are also taking some share from some of the orals out there. So talk to us a little bit about like before we get to salanersen, I mean, do you think HD could make it a stable franchise? Or like how do you think -- how do you envision it?

Yes. So we've been very excited with the rapid nature by which the patients have been switching from the low dose to the high dose. And when you sort of peel back and you talk to the folks in -- on the R&D and our development side, it was a patient-driven expansion into HD and the patients were asking for more. And so we put in place the study to be able to see whether a high-dose option was -- would be appropriate. And so I think you had the health care community and the patients seeking to have SPINRAZA with a higher dose. And we do think that SPINRAZA is viewed very favorably from an efficacy standpoint. And I think seeing the rapid nature of the switch over to high dose is a good indication. That's happening both in the U.S. and in the EU.

And the nice part of that is it gives us an opportunity to have a bridge to salanersen. And so you're right, it has stabilized. The patient volumes have stabilized over the last year or 2. And 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 are going the gene therapy route, but we're starting to see those, and we're starting to see some switchbacks. And so that will be something that we monitor, but we think there's an opportunity there.

Got it. And then can you talk a little bit about the port device that is in development right now? So how does this help in terms of -- like I think you're developing it for SMA first and then eventually maybe in Alzheimer's also. Can you talk a little bit about that?

Yes. You want to cover the port device?

Sure. So yes, we have been in collaboration with a company called Alcyone for some time. So we went ahead and acquired the company last year. So this provides us -- so 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. And then there's a port that comes up to the side. And so you just can inject SPINRAZA directly into the port. You don't have to do the spinal tap every time.

So 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 treat -- to use SPINRAZA from an administration standpoint. That also has opportunity, though, as you think about other intrathecal administered ASOs. And so we have a collaboration with Stoke, for example, in Dravet. We have BIIB080 from an Alzheimer's perspective, and we have other preclinical assets as well as salanersen.

So 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. But then if you can remove or reduce the barriers to treatment that I think is going to be an effective strategy.

Yes. And the nice thing about salanersen that we're excited to explore is that, that would be a once-yearly.

It does look like a better drug as well. Like how do you think about salanersen profile here?

We were very excited about the results and excited to be putting that into Phase III. And from a serving the unmet need, we think it's -- we're very excited about the advancing of it.

Got it. And then, I mean, you are really going big in nephrology right now. So like now that I have you, Adam, here. So can you walk through the thought process behind going deeper in nephrology, not just felzartamab, but again, you are in lupus nephritis and you -- like -- I mean -- and then a bunch of lupus assets, they're not nephritis per se. But again, like just talk a little bit about lupus.

Yes. So again, I think 3 years ago, we set out on a plan to diversify the company, have a different type of R&D risk. And so 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, but where the path to approval was clear, the endpoints were validated. The clinical trials were approachable from a size, length of time. And 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 health care issue. So 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.

So 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. And nephrology, again, is a series of smaller rare diseases. And so we started with AMR, IgAN, PMN, MVI. With EMPAVELI, we're also exploring not only C3G, but also FSGS. So these are indications all within nephrology. So 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. So there's a lot of efficiency there.

And so with HI-Bio initially, but then with Apellis, we are really building out a franchise in nephrology. We continue to be active externally, looking at additional investments and early-stage assets in nephrology, and we continue to be excited by the opportunity there from a scientific standpoint.

And then just 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. And then we've 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. So if Biogen does more BD, what would be the gating factor now because you're just out of the Apellis deal? So how -- is it therapeutic area? Is the size of the deal? Like how would you think about it?

Well, I do think that we're very excited by the near-term growth prospects with existing portfolio that we have in terms of commercial products, but also the new pipeline readouts. So I think our attention for this year and into '27 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 in -- 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 a 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 has 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 RayThera, which we closed in Q3, which is an immunology asset going into Phase I. And so -- but we're really back to optimal liquidity here as we exit 2027.

Got it. So one last question for both of you. Fast forward 1 year, September 2027 Wells Fargo Conference. I hope you are here. I hope I'm here. So if we are sitting here 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. And the second would be that we are extraordinarily busy working on doing prelaunch and launch activities associated with lupus and with AMR.

Yes. I would just add, I think that the continued progress of the growth -- the commercial growth products is an area that will really underpin the midterm stability for the organization. So I think delivering on those commitments are going to be key. And so we look forward to giving those updates next year.

Awesome. On that high note, thank you very much and good luck.

Thank you.

Thank you. Thank you, for your time.

[Audio Gap] conference operator today. At this time, I would like to welcome everyone to the Biogen Second Quarter 2026 Earnings Call and Business Update. [Operator Instructions] 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 will make forward-looking statements, which involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review.

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

On today's call, I'm joined by our President and Chief Executive Officer, Chris Viehbacher; Dr. Priya Singhal, Head of Development; and Robin Kramer, our Chief Financial Officer; Alicia Alaimo, President of North America, will also be available for the Q&A section of the call. We'll make some opening comments, and we'll move to Q&A and to allow us to get through as many questions as possible, we kindly ask that you limit yourself to just one question.

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

[Audio Gap] with the goal of achieving sustainable revenue growth. So if I take the three elements that I think contribute to that is, first is our growth product portfolio. Now even before we include the products from Palace ], we've seen significant growth. And in fact, our growth portfolio now is greater than our legacy MS portfolio.

And that's really been most recently enhanced by two important achievements. The first is SPINRAZA high dose, where we've seen across all markets. The first market to be approved was in Japan than 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. And this is a franchise that we see for the longer term because we've got [ salinersen ] coming along behind that.

So maintaining market share. And in fact, what we're seeing is some anecdotal switchbacks, particularly from the oral product to SPINRAZA, it's important not only for the quarter, but important for the franchise longer term.

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

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

We think also that there could be a benefit in maintaining patients longer on therapy. And then finally, we think there's a competitive advantage because the benefit of 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. But then the third element is really [ CYFOVRI and Pavel ] from the acquisition of appellate. 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. But those products are already contributing significantly to our own growth. And I'll take the opportunity here just to note that if I think about all of the integrations that I've certainly seen over my career, one of the most important metrics is really how revenue does through this period of turbulence really in an organization.

There's an awful lot of uncertainty that comes from these major transactions. And the ability to maintain continuity of revenue is, I think, the #1 measure of the success of an integration. And I think so far that we have seen that, and that's really because this is mostly a U.S. transaction, this is really a credit to Alicia, Alicia's leadership and her team and really reaching out and making sure that the [ Appellate ] team feels great about joining Biogen.

And certainly, when I talk to the former [ Apellis ] now Biogen employees, one sense is a sense of energy and passion and commitment. So we're very much encouraged by the importance of this acquisition.

So the next slide is really, again, and Priya is going to talk a lot more about this. But we've got a growing base, and now we've got 5 registrational Phase III clinical trial results coming along. Obviously, 2 in SLE for lupus, 1 in CLE for lupus, 1 for AMR and 1 which is really from our partner at Stoke in [ Dravet ] syndrome. So those are now within the next 4 quarters. So these are 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. And the encouraging thing is that I think we are now in a much better place already in our early-stage pipeline.

Some of that is coming early. We've had 3 INDs already this year. We've got more to come. We've done a number of key collaborations like [ Bank and Dave ] last year, the acquisition of [ Bayer ] this year also substantially boosts our early-stage pipeline. These are -- this is really investing today for really what the products launching in the mid-2030s. But you've got to start today if you want to have those -- that growth tomorrow.

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

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

Now this is also a major shift for Biogen. 3.5 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. in epileptologists and nephrology transplant. So there's been a significant growth in the breadth of our portfolio.

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

But we're also keeping an eye on the longer term, and that's that third wave, the opportunities for longer-term growth. [ Dear Nursing ], 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 removed early stage pipeline that I just talked about is so important in the research portfolio.

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

And so when you look at what is the opportunity, and these are not revenue forecast, but really an initial sense of what's the addressable market that come from the pipeline. And I would say we're still doing work. We've got lupus here as a potential $8 billion market. The MS market is over $20 billion. And I think we're not there yet in terms of being able to really say how we access that. It's probably a $2 billion to $3 billion market today, but there's no real reason why this market shouldn't be the size of MS.

But even if you just say the $8 billion, that's a significant opportunity for us to go after. And obviously, not only with SLE, but we would hope to be the first product to be approved with for CLE.

Then 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. It depends on which pricing you're using. But when you see the pricing that is now occurring in IgAN, that is going to have a spillover effect on AMR. And then when you think about microvascular inflammation, which is another indication we're pursuing, that market could also grow. And, of course, then later on, we've got IgAN and PMM data coming for felzartamab.

And then [ 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 to 24 months from launch on those things and continue to work. But this shows the potential. It also shows why we have to execute with excellence, and we're busy investing today to make sure those launches are a success.

And so we go to the last slide. If you looked at Biogen pre the [ Appellate ] announcement, consensus of investors was that Biogen was going to be roughly flat through 2030. I think we're already seeing that consensus start to shift because people start to appreciate the [ Apellis ] transaction. But the way we certainly see it is when you take the appellate marketed products, and you add them to our own growth product portfolio. I think we're seeing a growing picture.

And when you now then take the late-stage registration pipeline, now I can remember vividly, one investor in the meeting that we had just after we had announced [ Appellate ] saying, "I get it. The late-stage pipeline now comes on top of a growing basis instead of a stable basis." And I think this slide neatly encapsulates really the strategy to return to sustainable revenue growth.

And with that, I 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, and I am excited about this future. That is because today, we have one of the strongest and most diversified late-stage pipelines in Biogen's history with multiple near-term opportunities to create value in the upcoming years.

We shared this slide with you at the beginning of the year. And today, you can see that we are delivering on the opportunities we outlined, including the FDA approval of IQLIK initiation, which is an important innovation for patients and caregivers.

Beyond IQLIK, Biogen and [ Eisai ] presented new data at AAIC earlier this month. This included real-world evidence supporting the long-term benefits of continuous LEQEMBI treatment. We also shared new data for [ David Nelson], establishing proof of concept in Alzheimer's disease and we are now focused on developing the next steps for the program.

And more broadly, we continue to demonstrate medical leadership across our portfolio with important new data presentations for both [ tisotumab and ZorivoNursen ].

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 multiyear registrational cycle, beginning with SLE data by the end of this year. and followed by multiple catalysts extending through the remainder of the decade.

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

At this point in the year, we are also now beyond our high-risk, high-reward readouts, as we mentioned at the outset. This includes our Phase II BTK inhibitor, [ BIB91 ], where we achieved proof of concept in relapsing remitting MS. And in line with our disciplined approach in how we advance assets, we are evaluating next steps, given the increasingly competitive nature of that market.

As we rebuild our early-stage pipeline, we expect to add 6 new programs this year, including new Phase II proof-of-concept studies to broaden the potential of [indiscernible] and [indiscernible] in autoimmune disease as well as first-in-human studies from our internal pipeline and the lead asset from the pending [ Vatera ] acquisition, which is now already in Phase 1.

Overall, we believe these investments are building a durable innovation engine with the promise of delivering sustainable, long-term growth and value creation.

So as we step back and look across the next several quarters, we expect readouts from 5 registrational studies across 4 important indications, SLE, CLE, AMR and [ Dravet ] syndrome. And reflecting the strong execution of our teams and enrollment momentum, we have also accelerated the expected Phase III readouts for [ vazadimab ] in AMR and [ mitipiimab ] 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 [ Ametis ] study at the EADV Annual Conference, which we believe will provide important insights into the durability of response for [ litefolumab ] 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 3 to 4 years has 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 $1 billion of revenue in the quarter, up 24% year-over-year and 25% quarter-over-quarter.

The Biogen stand-alone growth products, excluding our [ appellate ] SYFOVRI and [ Apave ] revenue was $933 million, up 9% year-over-year and 10% quarter-over-quarter and as Chris noted, generating revenue in excess of our legacy MS portfolio again this quarter.

Our growth portfolio has been further strengthened with the addition of SYFOVRI and [ EmpaVelli ] from the [ Appellate ] transaction. which generated $128 million in combined revenue for the period post the May 14 acquisition date. This quarter's results demonstrate strong commercial execution and the significant progress we've made in our portfolio transition.

Let me now take you through some key highlights from our core pharmaceutical product performance in the second quarter.

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 onetime 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 end-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. And as Priya mentioned, we are pleased to have received FDA approval for IQLIK initiation earlier this month.

SKYCLARYS saw patient demand growth both in the U.S. and ex U.S. in the second quarter with revenue of $168 million, representing 29% growth year-over-year and 11% on quarter-over-quarter. SKYCLARYS Claris 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, and we're also pleased to announce that ZURZUVAE now launched in Germany. For the MS portfolio, I would like to highlight that [ TYSABRI ] continued to demonstrate resilience in 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 [ Appellate ] acquisition, which closed mid-quarter on May 14. The integration is progressing well, and both SYFOVRE and EMPAVELI had strong performance in the quarter. SYFOVRE continued to demonstrate market leadership with total revenue in the quarter of $162 million up 8% year-over-year and quarter-over-quarter, with total commercial injections up 13% year-over-year. EMPAVELI continues to launch in C3G and primary IC-MPGN and 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 2 best-in-class commercialized medicines to our growth portfolio, which we expect to contribute materially to our top line growth in the near and long term. We expect SYFOVRE and EMPAVELI on a combined basis to grow in the mid- to high teens through at least 2028. In addition, we expect this transaction to materially increase our non-GAAP diluted EPS CAGR through the end of this decade.

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

For 2026, we expect approximately $0.85 of non-GAAP EPS dilution, primarily from financing costs associated with the transaction. We expect the transaction to be accretive to non-GAAP diluted EPS in 2027. We believe this transaction represents an attractive use of capital that will further bolster both our top line and bottom line growth prospects and 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 0.5 quarter of operating expenses and financing costs associated with the acquisition of [ Appellate ]. 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 [ Appellate ] transaction.

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

For R&D, it also reflects our investments in our Phase III clinical programs, including [ felzartamab ] indication in MDI and [indiscernible], which were advanced as registrational studies in the second half of 2025; and [ lidafilimab ], 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 [ lidafilimab ].

For sales and marketing, it reflects support of our U.S. and international product launches and investments in prelaunch 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 [ salinersen ] and SMA, and an upfront payment of $15 million to Ionis to opt into BIB147 in broad ALS.

Now turning to cash flow and the balance sheet. We continue to generate strong cash flow with about $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 [ Appellate ] transaction in the second quarter, which was funded with $3.6 billion of cash from the balance sheet and $2 billion of term loans. During Q2, we repaid $200 million of the term loan and continue to expect to repay the remainder of the term loans by the end of 2027.

Turning now to guidance. Based on the expected revenue performance of our base business, including our growth products and [ Tysabri ], our guidance update reflects a $0.60 increase in the underlying business guidance as compared to our previous guidance. We are pleased to be increasing our total revenue guidance from a mid-single-digit percentage decrease to a mid-single-digit percentage increase. This reflects both the expected performance of our growth products into cabin 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 midterm growth. It incorporates transactions that have been executed and our current expectations of those that will occur for the remainder of the year. It incorporates approximately a $3 non-GAAP diluted EPS impact of charges associated with IPR&D and milestones, including the Q2 TJ Bio transaction, the Ionis milestone associated with achieving the first patient dosed in [ STELLAR 1 ], our pivotal Phase III [ selinersen ] study in SMA; and the pending Vatera transaction associated with the addition of a Phase 1 immunology asset into the early-stage pipeline, which is expected to close in Q3; and the expected full year 2026 $0.85 dilution associated with the [ Appellate ] 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 assumption.

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

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

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

[Operator Instructions] Your first question comes from the line of Chris Schott with JPMorgan..

Great. Sorry, on met again. Just a quick question for me on HD SPINRAZA. Just a little bit -- elaborate a little bit more on how the ramp is coming here compared to internal 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? So the product as well? I'm just trying to get just a general sense of just how this is progressing and impacting the franchise.

Chris, this is Alisha. I'll take that question. So if you really think about SPINRAZA is almost a decade after introducing the first SMA treatment, what I think you're seeing is SPINRAZA still setting the bar on efficacy in the space.

And also if you think about how to SPINRAZA HD even come about, this was from several years ago, we had many patients come forward. to Biogen saying we just wish we had more. We wish we had more. We feel like we could take an even higher dose. And then obviously, Biogen went in and developed this new formulation. And here, we have high dose today.

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

So when you look at the Q2 revenue, sites are ordering high dose to prepare for each patient's next dose. And when you think about the dosing of the product, you do have to wait a quarter or 2, depending on when you had your last dose of SPINRAZA. The feedback from patients so far that have received the product has been quite positive, also from the physicians quite positive. So the teams are really supporting the payer approvals and the account P&T reviews and patient transitions.

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

So we think for this year, what you're going to see is the bolus of the transitions along into the beginning of next year, but our big focus for 2027 is going to be on new starts and on switchback.

One of the advantages that you have that we didn't realize was going to be such a positive in the market. is with the spin 12 mg, there are 4 loading doses with high dose, there's only 2. And we do have patients who are more willing to do the 2 as the loading dose than the 4, and that is where you're seeing also some of the switchbacks and new patient starts.

Yes. And just the U.S. is actually 1 of the last countries to launch [ Axeon ] usually. So Japan, where we launched earlier as in Europe, that's where actually we're seeing, particularly in Germany, seeing a reversal of the 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. But again, as Alisha said, in all markets, and I go talk to physicians around the world when I'm visiting our affiliates, at the end of the day, it's really in these devastating diseases efficacy that really matters, and there is an enhanced opportunity here for that.

We'll go next to Umer Raffat with Evercore

I guess I want to touch up on expectations ahead of your lupus readouts this fall. And specifically, we've seen Benlysta track at sort of mid-teens separation on SRI. We've seen [ Safanella ] from AstraZeneca track at something in the 20s.

I guess in your -- based on all the work you guys have done what separation versus placebo would constitute something that's considered very clinically meaningful and differentiated over what's out there in the marketplace right now?

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

This is Priya. I'll take that. So I think just stepping back, we're really excited about our [ TOPAZ ] trial. This is [ TOPAS ] 1 and 2. We will have results from both of these in Q4 this year. These are our SLE trials. .

So maybe just stepping back, I'll just comment on the fact that we've taken all the learnings from the prior trials to really ensure that we set these trials up appropriately. And by that, I mean we focused on the high placebo responses that you've seen in past trials. Our trials have had rules to limit standard-of-care utilization by that, I mean NSAs, corticosteroid [ tapers ], handling data for responders and nonresponders.

But we've also stepped up to really think about the fact that this is a heterogeneous disease. So how do we control a patient and participant heterogeneity? And we have tried to model our inclusion/exclusion criteria to be really quite -- track very closely to Phase II LILAC proof of concept.

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

Our primary endpoint is [ SRI4 ]. However, we have a key secondary endpoint in [indiscernible] and we have multiple patient-reported outcomes. So we'll really be looking at the totality of the data, including [Audio Gap] and we'll be presenting 52-week data at EADV this fall, so we remain confident in that data set as well.

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

You want to add anything, Alicia, in the market research. Because I think -- this is 1 of those ones where it's no 1 thing that's going to be a marker of success. You've got steroid sparing. One of the things that we consistently hear from patients is fatigue and yet you can't really build fatigue into an endpoint in the clinical trials as easily. So real-world evidence will play a role, but maybe you can say a few words on what it's going to take commercially to succeed.

Yes. Thank you, Chris. 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. And I have to say we've probably got more insights from them than the actual market research that you can get that through third parties. .

And I have to say that we talk about things like SRI-4 and endpoints. But when you really look at a physician and a patient 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 3 things that are really bothering me are fatigue, brain fog and joint pain. And I do believe in this market, when you look at CLE, where there's only less than 5% of CLE patients receiving advanced therapy.

And I also -- because there is no approved therapy, I think the CLE patient members are undercalled. I know that we've reported out 75,000. I think that, that is a much lower number than is actually out there.

Secondarily, you're seeing that patients are getting lost in the system being transferred from derm to room and room to derm where no one really knows how to treat them. And then with the treatments that are on market as of today, there is downfalls. One does not work very quickly or very well and another has an infection safety issue.

And so when you speak to these physicians, they are really looking for a treatment that can work much more quickly and can work in both CLE and SLE. So I think that there's a very long runway for this therapeutic area. And because there is such a huge unmet need in these patients, are known. We can track them in the system because they are -- 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.

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

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

Thank you for the question. There is a lot going on with SYFOVRI 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 Sipo routine. I think the first thing that we have noticed with both SYFOVRI and EMPAVELI is when they came onboard the company, both used very similar launch plans. .

And I think the 1 thing that we've really learned over the last 7 years with our 7 launches is that we really tailor make our launch plans. We really build them from the ground up. We launched very much informed, and it's not templated.

And so what we've been able to do is work with the SYFOVRI team across the board, understanding what's really driving sales, where can we maybe reallocate capital? And how do we get the Biogen machine to sort of help drive some of their momentum. And so I'm very encouraged by the strongest quarter since really launch for SIFOVRI. And in the month of June, the month of June was the best month in the brand's history.

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

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

They grew both in patient numbers and in physicians who are prescribing. And I think that 1 of the tailwinds on that was the long-term 5-year data that they've been presenting, which is really a lot of education around the progression of GA.

And specifically, when you look ahead, the market is only 50% of the retina specialists are treating and only 20% of these patients are diagnosed. And so the team is really looking at a couple of things. One is the direct-to-consumer. We have decided to shut down a few programs we're reallocating to a new commercial. I think maybe the SYFOVRI team and leadership thought, their DTC came out a little too soon now that we think that the market is ready. We do plan on launching a DTC campaign that we believe will be very effective.

Secondly, 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. So that's also great.

But more importantly, on a previous call, I think I had mentioned to you when we were looking at SYFOVRI, one of the things we had seen in our diligence is that there really was a big discount, a lot of patients discount after a year. Well, now that the team is onboard and we really looked at the data, we've noticed that actually the discounts happen after the first injection. That's where the big bolus comes from, even though it really only shows up in the numbers after a year where you see the 50% drop off.

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

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

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

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, Salveen. This is Priya. So just stepping back, we took BIIB091, which is a peripheral BTK inhibitor, noncovalent, into a Phase II trial in RRMS a few years ago. And now we've concluded the trial. And what we see is that it could have compelling efficacy in RRMS. But actually, as I mentioned in my remarks, we are looking at what is the appropriate next step because we see RRMS as a very crowded competitive market. but we're also looking at the external inflections that we've seen in the BTK landscape.

So we will communicate more about how we see this asset progressing further. And we haven't actually made a decision to specifically advance it into an indication. So we're not there yet. We're still evaluating the data. Overall, we see that it could perform really well in RRMS, but I think it's another very important example of how we prioritize assets in our portfolio where we look at the scientific data, but we marry it up with the value and the opportunity in terms of totality and really capital allocation. So this is an example of where we're taking a pause. We're looking at the data, and we will assess how and when and if we would advance it. beyond where it is today. I hope that helps.

will go next to Michael Ye with UBS.

Thanks. Our question actually is going back to letefilimab 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. So could you just comment about your view of CLE versus SLE and perhaps some of the data you might be getting at EADV that could help drive more confidence in that because I think there's some additional data presentation coming up?

I think stepping back, I actually don't see a difference in terms of probability of success between SE and 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. And it was important because we tested the SLE population. However, it was enriched for where we believe litefilumab will have the strongest actions based on its mechanism of action.

So we have focused our SLE trial to be quite specific to patients who have skin and joint involvement. And that is why I think I remain confident in how we've set this trial up and probability of success.

Similarly, with CLE, I also remain confident because of the focus on the skin and the data that we've generated so far. It just happens to be the situation that for SLE, given the broad indication and it's a very unfortunately prevalent disease, we have 2 Phase III trials -- and then with CLA, we have a Phase II, Phase III trial, and that was a seamless trial, the [ AMICUS ] trial.

So 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, and we are just simply taking that data forward and bringing it to EADV.

We've already shared the Phase II randomized control part of [ Ametis ] earlier this year. So now we're sharing the 52-week data, which hopefully will say more about durability of response. But no, I think we remain confident in all 3 trials.

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

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

So on Impavly, I noticed you are initiating a Phase II in FSGS, Wondering broadly how wide of a development that 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?

And then 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 as a [ alibabat ] Amgen is running a Phase III program in sovereigns.

Maybe I'll start with [indiscernible] there. So I think we remain excited about the fact that we've brought in [ EmpoBelly ] and of course, it's nephrology indications as well as the proxy [indiscernible] and hemoglobin urea remain very important commercial indications.

But as we've been -- 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 based and we would not be continuing that. But the FSGS, we believe, remains a really important indication.

And the reason for this is that we believe it's a high unmet need. It does have clarity on primary endpoint and regulatory pathway as well as the ability of [ EmpoBelly ] to really address the C3, C3B cleavage pathway and thereby impact the auto antibodies. And we have real-world data, but also muting models where we've seen elevated levels of C3. So we believe this really is a science forward approach.

And we are being very prudent. We're taking this forward as a Phase 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 [ Ampobelly ] legacy team has already sought FDA feedback. So this still comes with a really nice package, which we believe is worth prosecuting. So that's where we are.

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

For example, with the 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.

Now 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.

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

So 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 reactions on 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 [ Abeta ] antibodies.

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

Now the business decision really to go forward with that is Priya had already -- when we got the data range for an independent biostatistician to review the data. We had an outside [ KME ], review the data before we announced it, done multiple advisory groups. We had the [ AIC ]. 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 overanalysis of the dosing question.

There's a lot of different hypotheses. There's one -- it's very clear that tau is important to neurotransmission. And so while too much is not good, maybe too little is also not good. We just don't know. This is the issue of being in breakthrough. It's very exciting, but it's also one of the reasons we decided not to build the company on this type of product. This is one of these high risk, high reward.

We're doing a lot of investigation and discussion with the neurology community. And obviously, we'll be consulting with the FDA. We also have long-term extension data that are coming along, and we'll make those available.

But this is a long-term investment. It will be -- we're confident in the signal. And 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. So that's all we really want to say about [ dearnersing ] at this stage.

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

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

Thank you. I'll take that question. As you know, earlier this month, we received approval for LEQEMBI IQLIK induction, And it will be available by the end of August in market. So what we've done is our field teams are trained. We are educating the HCPs and letting them know availability is expected next month.

So we've already had some demand. Of course, it's not getting filled yet, but they are put into a queue. And so we've had -- as of yesterday, several physicians have already written scripts. And so we're not really counting that yet in our expectations until the product is actually readily available for the market. So we're keeping a close eye on that.

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

However, even if some of the Part D plans don't contract, for LEQEMBI IQLIK, the other route, which they've been going through with IQLIK maintenance has been medical exceptions.

Now when we pull the data to look at the medical exception rate for the product, it is quite high. higher than most other therapeutic areas. And so even when a physician does put that through the grant approval rate is high, meaning that they are getting the product for the patient.

And so it remains to be seen what happens as of [ 1/1 ] next year, for the coverage, which, by the way, even if you get a Part D plan coverage, a prior auth must be filled out. So doctors either filling out a prior other filling out a medical exception form for the product. So we also believe that based on the market research that we have done recently, IQLIK will evolve this market. and will be another contributor to growth once it gets off the ground.

Now keep in mind, a lot of the protocols for LEQEMBI are written for IV. And so a lot of the IDNs and hospitals and systems are starting to rewrite those to incorporate IQLIK, obviously, also into their workflow.

And we also see that Chris had mentioned earlier, when you look at drop-off rates, which there's drop-offs at many points in a patient journey, but one particularly is when they finally get to a physician who believes in 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 [indiscernible]. We also believe in our market research, it shows that those patients would opt on to doing subcu. And so there is a big portion of patients that drop off exactly for that reason. And so we believe that, that will also help accelerate the market.

We'll go next to Pal Matias with Stifel.

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

It's a very important area for us and has been for a while, perceives any data readouts that we've had recently. So that's what I can tell you. We are working internally. We're also looking externally, and we've been doing the work on shuttle delivery really deeply here.

So we remain very interested in getting to tissue delivery modalities. And I think we would think about that across several targets. That's what I can share, but it's a high priority for us.

Yes. I mean longer term, Alzheimer's is certainly going to be a core part of the portfolio of Biogen, particularly now that there's there's a very good chance that [ Derinersen ] ultimately makes it to market. Clearly, we have to go through the Phase III program. But again, I think when you -- what really is important for this market, and you've talked to physicians who actually treat patients. It's really moving cognition. So that's what has caused us to go forward with [ deranursen ].

Now then it probably makes sense to have a portfolio of products. And we're already even talking internally, and we haven't made any decisions yet, but are you going to combine an [ A beta ] with an anti-tau, for example. There's a question of, well, maybe you don't even need to take after you do say 3, 4 injections of anti-tau, maybe you need that just an [indiscernible] to actually keep the tau from coming back.

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

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

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

Thanks, Evan. One of the things that we saw when we were doing diligence on the [ Pallas ] was that there really hadn't been much value associated with EMPAVELI. And I think there is a tendency to really focus on kind of lead products in companies. And for some of these programs, where there is no treatment, there are also no analogs. And so I think what we see is and what we've heard from a number of analysts and experts is that there tends to be a placeholder value put in there.

And people then want to wait and see the data. But 1,000 patients. And if you took even the Otsuka price for iGame 350,000 you're getting somewhere between a $3 billion and $4 billion market. And when you consider that the Phase II data showed an 80% resolution of AMR in an open label in a small study and obviously something we have to repeat in a Phase II. But there is no product approved for AMR today. So -- and the option for patients is either treatment with [ felzartamab ] or perhaps a second kidney transplant.

I mean I was in 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 have already had a kidney transplant. So there is a huge unmet need. This is a product that really seems to work. So we have very high hopes for this product.

We'll go to Terence Flynn with Morgan Stanley.

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

Yes. I can start. I mean we haven't commented publicly on the powering. We believe we have a very robust trial design and power to really give us confidence in the outcome. So I think we remain confident in our trial design.

As you know, the trial, the TRANSCEND trial is a 6-month placebo controlled. This is biopsy driven as an end point, which is really important. And then patients move on to maintenance for the next months. And I think durability, but the 6-month time point are both important.

We have been able to -- I think that's another really good sign, but we've been able to accelerate the trial. So now we expect data in the first half of 2027. And I think overall, we remain really excited.

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

And we think that, yes, the the [ fazatemab ] 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. So this remains an important auxiliary but very important aspect of the unmet need.

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

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

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

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 and AAIC 2026 Webcast. [Operator Instructions] Today's conference is being recorded. Thank you.

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

Thanks, Jess, and good afternoon, everybody. Thanks for joining us today. I'd like to start by just pointing out that we'll be making forward-looking statements, which are based on our expectations. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional details.

Joining me on today's call are Dr. Priya Singhal, Head of Development; and Dr. Diana Gallagher, Head of Clinical Development for immune-mediated neurodegeneration. You can access the press release and supporting materials regarding today's presentation as well as a replay of the call at biogen.com.

And I'll now hand it over to Priya.

Good afternoon. It's great to be speaking with you from AAIC. As you know, we also just had good news for patients with the approval of LEQEMBI IQLIK for treatment initiation for early Alzheimer's disease. We at Biogen have chosen to tackle Alzheimer's disease for several years. And having been at the forefront of innovation in Alzheimer's, it is really good to be here at a key Alzheimer's medical meeting with important progress in the field to share.

Today, we are pleased to join you to present data for diranersen, which we believe demonstrates an important advancement in targeting tau. The CELIA study was a pioneering effort. What we have observed is that diranersen offers a differentiated approach that leads to tau lowering, demonstrates robust tau tangles reduction in the brain and importantly, has a substantial impact on multiple clinical endpoints.

Several aspects of the CELIA data are unprecedented. As you know, the purpose of the CELIA study was to determine if we could achieve proof of concept and therefore, identify a dose to advance into Phase III development. We know that many of you have had questions about how we are thinking about this asset because we did not observe a typical dose response with this drug, which was the primary endpoint.

What I can tell you today is that we are seeing promising results that importantly provide us with proof of concept and an emerging dose, which is supported by: one, an unprecedented reduction in both tau tangles in the brain and clinical efficacy; two, diranersen being favored for all doses, showing consistency across the data set; three, the 60-milligram dose twice a year, demonstrating the largest and most substantial benefit across nearly all endpoints; and finally, the results that reinforce the prior findings from the smaller Phase Ib study.

Furthermore, not only did we see a CDR-Sum of Boxes benefit similar to the anti-amyloid therapies at 18 months, but also cognitive efficacy signals not seen before in an Alzheimer's clinical trial for a potential disease-modifying therapy. This is important because while CDR-Sum of Boxes is an important endpoint for clinical research, patients and their doctors care deeply about cognitive endpoints and cognition overall. Diranersen now has the potential to be administered just twice a year and has a mechanism that is not associated with ARIA.

Now let's walk through what we have learned from CELIA with Diana.

Thank you, Priya. Let's start with a reminder of the 2 targets most closely associated with Alzheimer's, amyloid and tau. While the current treatment landscape is focused on amyloid, research has also told us that tau and more specifically tau pathology spreading across the brain is much more temporally linked to cognitive decline. Thus far, as you know, antibody approaches have not been successful in showing clinical benefit. We believe that this may be because they primarily target tau outside the cell and are likely unable to impact the intracellular tau pathology.

However, diranersen acts via a very different mechanism. Our ASO targets the reduction of the translation of the MAPT gene into tau protein, thereby reducing the production of all isoforms of tau inside the cell, impacting both intracellular and extracellular mechanisms. Our hypothesis remains that reducing tau production results in overall reduction of tau pathology in the brain, potentially translating to a clinical benefit as a result, neither of which have been seen before in any other tau-directed agents tested thus far.

So now let's talk about how we tested that hypothesis. On this slide, you'll see our Phase II design. Let's remind you of a few key features. This was an 18-month study recruiting patients with early Alzheimer's and mild cognitive impairment, where patients were randomized to placebo and 3 different dose levels of diranersen. We measured several clinical endpoints, including CDR-Sum of Boxes, ADAS-Cog 13, MMSE, ADCS-ADL-MCI as well as modified iADRS and Ad Comm.

We measured total tau in the CSF for all subjects. And then within a substudy of the population, approximately 30% of the subjects, we also measured tau PET to assess changes of tau across different regions of the brain. The primary endpoint was intended to formally assess a dose response to CDR-SB and change from baseline.

Before we look at the results, let's review who we recruited into the study. Here, you can see the baseline characteristics of the patients recruited. What you can see is that the arms were generally well balanced across elements such as MCI versus early AD as well as APOE4 gene status. So now let's talk about what we found in this study. To start, the primary endpoint assessed was whether increasing dose levels improved efficacy compared with a predefined dose response. As you know, we did not meet and observed that dose response pattern in this trial. Importantly, as shown on this slide, diranersen was favored over placebo across nearly every endpoint though, which is very promising.

So let's take a close look at what we saw in the data. Starting with CDR-Sum of Boxes. We saw the largest and most substantial effect at the 60-milligram every 6-month dose level. What's most interesting is that for this dose, you're seeing the difference compared to placebo, which is similar to the current anti-amyloid therapy. And when we dig deeper into the data for that 60-milligram dose, we see a very compelling profile emerge.

On this slide, we have placed the 60-milligram data from today's AAIC presentation into context alongside results from historical amyloid therapy trials. While these are not head-to-head comparisons, we believe they are useful for thinking about our decision to move diranersen forward to Phase III. Recognizing the sample size limitations of the Phase II, what we are seeing is that the benefit on CDR-SB is similar to anti-amyloid, but with a greater effect size on cognition than what we have seen with other agents.

For example, we observed 42% for ADAS-Cog 13 and 50% for MMSE. You'll note that for ADCS-ADL-MCI, we were not seeing separation for the 60-milligram dose at this endpoint so far at 18 months. But importantly, we will continue to follow patients and look forward to seeing how this evolves over time, including looking at 24 months. And furthermore, even at the 18-month time point, the story for functional benefit is much broader, as I'll show you on this next slide. And that's because when we examine the individual components of the CDR-SB, the benefit is not driven solely by cognition, but is also evident in the functional domain.

As you may recall, CDR-SB consist of 6 domains and the top 3 on this slide assess cognition, and you can see consistent treatment effect against each of those measures. But interestingly, the bottom 3 domains assess function, and we also see separation across these as well and a pattern that's reminiscent of what we've seen before on dose response. So we believe the fact that we are seeing impact on both cognition and function is encouraging.

On the next slide, we'll move into the biomarker data. And while we see substantial reductions in CSF tau, as you can see in the top panel of this slide, what further strengthens our confidence in these clinical findings of CELIA is that we're also seeing reductions in tau tangles in the brain as measured by tau PET. Looking at the bottom panel, you can see that in this subset of approximately 30% of patients where tau PET was measured, we see the burden increasing as would be expected for placebo in early AD. However, in all 3 diranersen arms, tau pathology accumulation was not just slowed but reduced from baseline. This has never been seen before with any other tau-directed agents. And in our view, this is a very important finding.

Turning now to safety. What's important to note is that diranersen was well tolerated in the CELIA study with no new safety signals identified as compared to our Phase Ib. Most AEs were mild or moderate and not serious, and the majority of patients completed dosing and even rolled into our ongoing long-term extension study. As we saw in the Phase Ib, confusional state was reported as an adverse event, and there was a higher incidence of confusional state AEs observed at those higher doses. But importantly, ARIA, which was not anticipated with this mechanism of action and the results in CELIA were consistent with this expectation, it was not observed.

I hope the data we overviewed today helps you understand the CELIA results and the implications. I'm going to now turn it back over to Priya to close out the discussion.

Thanks, Diana. I would now like to address what is next for diranersen. First, we will continue the long-term extension study of CELIA to evaluate durability as well as safety and tolerability. We expect to have 2-year data for CELIA by the close of 2026. And as more of the CELIA data becomes available, we will look to share and publish these data at medical congresses and in the literature. We have also reviewed the CELIA data with several external experts who are equally excited by the results and agree that advancing diranersen to Phase III is the appropriate next step.

We are now working urgently towards a Phase III study design and overall evidence generation package. For both of these, we continue to engage with key leaders in the field and will engage with global regulators as we take a thoughtful approach to determining the ideal design of the Phase III and additional data generation approaches. We look forward to sharing more with you in the future.

To conclude, we are excited by the opportunity to bring forward diranersen, which we see as having a compelling and differentiated profile, especially with respect to cognition, a tolerable safety profile without increased risk of ARIA and the potential to be administered just twice a year. And I'll note that the dropout rate in the trial was low and 94% of patients who completed the study have continued into the long-term extension study, which is very encouraging for obvious reasons.

Therefore, dosing continues in the LTE, and we have the opportunity to continue to learn more about diranersen, including the 2-year data. I hope that the review today helps you appreciate why we are excited about diranersen's overall potential to be the first tau-targeting medicine for early Alzheimer's disease and the reasons that we are advancing it to Phase III.

Tim, please go ahead and open the call for questions.

Thanks, Priya. Can we go to the first question, please?

[Operator Instructions] We will move first to Evan Seigerman with BMO Capital Markets.

As we look at the data, is it possible that you're not -- is it possible that we're knocking down tau too much at the high doses to not get an effect? And how do we know the 60-milligram dose is the right dose to take forward? There is a potential benefit of tau in some patients, as you know. And we don't know exactly if you're kind of cutting out too much of that in these patients. So a long way of saying, is 60 milligram the right dose to be taking forward? Should we be looking at lower doses here?

Thanks, Evan. I'm going to turn that over to Diana.

Thanks, Evan, for the question. So yes, I mean, one of the reasons we moved from Phase Ib, where we had in a small sample size tested some of these dosing paradigms to a dose-ranging Phase IIb was to answer the exact question you're pausing there and then to determine, do we have a path to Phase III and what is the dose. What we see in that 60-milligram dose, I think, is that we see the reduction in the tau CSF as well as a reduction in the tau tangles, which corroborates what we've seen in Phase Ib. And we see it across every endpoint that we measured of the key secondary endpoints with the exception of the ADCS-MCI.

And so that's really encouraging to us. In terms of assessing whether or not that we have the dose in its totality right, you see this also diranersen is favored across every dose, but our goal here was to identify the dose or the emerging dose that we take forward into Phase III. And we think that's what we've done here.

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

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

When we look at the 60-milligram dose arm, the end was small here. There were a lower amount of patients with APOE4, and there were fewer women in that cohort and lower amyloid PET potentially. So I guess what I'm trying to ask is when you look at all the information you have at hand right now on top of the efficacy metrics, just speak to how you think about further elucidating this on top of the dose work in the Phase III trial and the thoughts of doing a combo with amyloid in Phase III? And if I could just also add what's driving the confusion state?

There's a couple of questions there. Maybe we'll take them in order. And I think the first one had to do with understanding what we're seeing in this proof-of-concept study. And it is acknowledged that we were testing 3 different dosing paradigms versus placebo in that 2:1 to 2:2. And so we think we had nice overall distribution in the baseline demographics, but of course, it's never going to be identical.

And we think that when we're looking at that, we see effect sizes that are pretty comparable across. We've started to look at some subgroup analysis. We will be presenting that in the future. But what I can say directionally is that we're not seeing any significant differences based on some of those demographics that you had mentioned earlier. Of course, as we move into a large Phase III, we'll be able to confirm that in the next study.

I think the next question you had was how are we thinking about designing our Phase III. It's a great question, and it's something, of course, we'll be engaging with regulators about in the coming weeks and months. And I think, first, we have to remember, this is the first drug that has shown the ability to hit the target, reduce the tau tangles and show the clinical benefit. So we will be engaging with them to understand what is necessary from a sort of dosing standpoint as well as safety and ultimate efficacy in order to meet expectations there.

And so we're really excited about what tau can do for Alzheimer's disease in particular. And we also know that we will be hopefully engaging in a market that continues to have utilization of multiple sort of drugs. So we will be -- we're thinking just as you are about future states where patients based on their personalized biomarkers may sort of use drugs at the same time or sequentially and more to come there. But right now, we're focusing, first and foremost, on the tau monotherapy and then thinking about adjunctive data we can generate in parallel to that.

And finally, I think you had a question, Salveen, about the confusion event.

Sure. So as we mentioned, you did see that there was an increase in confusion in a dose-responsive way that [indiscernible] had shown on the podium today. I think what's important to note is that most of those events were mild to moderate. Most of them occurred within the first 7 days of dosing and then resolved within 7 days of dosing and patients were able to treat through that and continued on diranersen. So 94% of patients who were eligible rolled over into the long-term extension, which was a question we didn't know from an intrathecal standpoint, how would patients and families react to this. So we're seeing a lot of retention for this drug and this route of administration, which we think is encouraging as we move towards Phase III.

We will go next to Eric Schmidt with Cantor.

Maybe given this is a bit of a smaller Phase II, how did you guys convince yourself that the placebo group is not behaving apparently? Any comparisons you might have looked at would be helpful. And then I know there was also a question about the rate of completion on the study with the higher dose groups having a lower rate of completion. Could you comment?

Sure. So generally, in looking at placebo, acknowledging this is, as you said, a small study and cross-study comparisons are challenging. We see it's generally consistent with trials or sort of peer trials with mild Alzheimer's or MCI. So for example, we see the CDR-SB moving at about 2 points. There are some small changes and differences that you can see when you compare every single trial, but overall, we see it moving as expected.

And I think you had a second part of your question, which had to do with the higher dose discontinuation. Yes, overall, it is true, and we showed in the disposition on the podium today, what those rates were. I think it's important to note overall, in particular, comparability, particularly between the placebo group and the low-dose group. So that's something we'll continue to study. But again, the fact that we had high completion rates for an Alzheimer's study, particularly one that's intrathecally administered and high rates of rolling over to the long-term extension is something that we were looking to assess and are pleased with seeing.

And I think we're really pleased with the emerging dose and its benefit risk profile, right, because we are seeing very consistent rates of adverse events and rates of discontinuation. So that remains quite promising.

We'll go next to Michael DiFiore with with Evercore ISI.

Number one, what could explain the disconnect between tau lowering and clinical response? You think that the PD effect and clinical response will be positively correlated, but we saw the opposite. And also, why do we see cognitive benefit, but no clear functional benefit on ADCS-ADL? And just one more. Why would you say the decrease or benefit on MMSE was so much higher than it was on CDR-SB, especially when CDR-SB is generally considered to be a more sensitive measurement?

So we'll work to take those in order. And I think one of the first things I want to do in terms of tau lowering is sort of address that. We definitely understand why you're asking this question. It's important to note that it was a sub-study. So of those 131 patients that we were able to have tau and that there's a lot of individual variability in baseline tau levels, particularly in early AD. So we're going to continue to assess all of the different components of that as we -- to look at the variation in baseline tau burden as well as other baseline factors and what of all of those could be sort of rolling up into efficacy differences as well as differential tolerability. So that's a good question and something we're continuing to examine.

Your second question, I think, has to do with ADCS-ADL-MCI. It is a functional endpoint, and it is something that we didn't see moving on that 18-month time point. Interestingly, I'd point you back to the Nature Medicine paper where when we looked at another functional endpoint, we looked at week 37 and then week 100. We did see there actually on FAQ that it wasn't moving very much at 37 and then we started to see it at 100. So one of the reasons we have a long-term extension is to continue to see if any of these endpoints, which aren't behaving maybe as we would initially expect change over time.

But even separate from whether it does or doesn't move as we look over time, the reason we looked at other composite endpoints was because they have function in them. So as you saw in the podium, the CDR-SB has both cognition and function, and we do see a dose response similar to what we saw with the other endpoints on function. So we believe we're seeing an effect on function. It's not that there's only cognition. We see cognition and function, both in the CDR-SB as well as on the iADRS. So that was why this weight of evidence across multiple endpoints, key secondary endpoints is how we are confident that by targeting tau, we're seeing this clinical benefit.

I think your last question was why would there be a disconnect. And that's a great question. We're pleased to see the impact on CDR-SB at that level that we are seeing and on cognition and function. But you're right, that effect on MMSE and ADAS-Cog for cognition is really quite remarkable in cross-study comparisons. So it's something we're kind of at this pioneering space with what happens when you hit tau, what clinical benefit can you see. We're definitely seeing a significant impact on cognition alongside function. So we'll continue to examine over time, whether they remain comparable or continue to have this pattern. But I want to emphasize that it's in both cognition and function.

I'll just add that CDR-Sum of Boxes, as Diana mentioned, has got domains for cognition as well as function. We're seeing with ADCS that there could be a lag. So we might see this improve at 24 months, and that is something that we're waiting to see the 24-month data. That's going to be an important time point. And I think what's really encouraging about MMSE is that it is a test that physicians administer in the office and seeing such a treatment effect at the 18-month time point is really encouraging. But it could be a function, and I'm speculating here, it could be a function of the fact that tau is really the penultimate sort of protein accumulation before you get symptoms.

So maybe there is a differential on cognitive outcomes with an agent that addresses tau. We don't know this. This is speculative, but I would say let's look at the long-term extension data at the 24-month time point and see how these evolve.

We'll go next to Paul Matteis with Stifel.

I was wondering if you looked at inflammatory biomarkers or neurofilament at either of the higher doses and if you see any changes there? And I guess just more broadly, it sounds like you don't want to speculate on the mechanism of the inverse dose response. But at this point, are you -- like would you say you're convinced that there isn't some on-target tox when you lower tau too much?

Yes. We have -- thanks, Paul. We have looked at inflammatory biomarkers. We haven't yet disclosed that data. We look forward to disclosing it with sort of more data. And I would say that it's possible. I think there are several hypotheses as to why a higher dose may not actually translate to clinical efficacy. But I think we would be speculating. And I think it's important for us to kind of come back to the fact that we do have a dose that has emerged with a very encouraging benefit risk profile. As you say, tau does have a role in the normal physiology of the brain, microtubules and neuron. So all of this is possible. But I think we are really encouraged and excited by the fact that we've isolated the dose here.

We will go next to Terence Flynn with Morgan Stanley.

Maybe 2 for me. I was just wondering if you can comment at all on the phosphorylated tau data. It looked like that was something you did not present today, but just wondering if that's consistent with what you saw in Phase I. And then on the Phase III design, how are you thinking about the primary endpoint? I know when you did the sell-side call several weeks ago, you weren't committing to CDR-Sum of Boxes. And now that we've seen some of the other secondary endpoints, looks like the effect size might be more dramatic. So any preliminary thoughts on how you're thinking about primary endpoint for Phase III?

Turning to your first question first on the phosphorylated tau endpoints. We are analyzing that data, and we're looking at it, but haven't disclosed it yet. So we have a lot more data that we're going to be disclosing in the coming months, and we can look forward to sharing that.

In terms of your question about what will the primary endpoint for the trial be, we will be engaging with regulators, as I mentioned, both in the U.S. and rest of world. And I think we have not finalized what that will be. We do see an effect on CDR-SB, which was one of the important things that we wanted to do here. We also see it on iADRS. We also see it on cognition. So again, this weight of evidence we have across multiple endpoints gives us the opportunity to engage in that dialogue. But we have an understanding, particularly in the U.S. of typically what their expectations have been. And so we'll have that conversation with them.

And maybe we can offer that we have looked at p-tau181. We know that it's consistent, and we haven't shared details, but we look forward to sharing that.

We'll go next to Michael Yee with UBS.

Two questions. One is, do you believe that the tau reductions are basically pretty much all the same in overlapping confidence intervals on the doses. And so maybe all of those doses pretty much give you the same result. And so when you look at the results there and try to concord that with cognition, that basically all the overlapping confidence intervals are also pretty much the same also on iADRS. So to me, it looks like only CDR-Sum of the Boxes is a standout, but all the other ones basically overlap, particularly iADRS. So do you agree with that comment? And would you be open to using iADRS, which is arguably a potentially better endpoint for Phase III?

So I think all things are possible, and we're examining the data, as you said, and thinking about engaging with regulators. Again, we'd like to point out, we do see that impact on CDR-Sum of Boxes as well as the iADRS. And so seeing it in both places gives us that optionality and flexibility, which we're encouraged by. And to sort of toggle back to your question, is it true? It is true, there was a robust impact on the tau biomarkers, both in the lowering in the CSF as well as the impact across the tau PET. And so we continue to examine that data as well. But you're right, we saw a very robust sort of target engagement and reduction of tau tangles across all the doses, which was absolutely encouraging.

And we do think that a lot of those confidence intervals overlapped. So we think that it is -- it's hard to say that there was a dose response on the tau reduction. The second thing I would just say about iADRS and CDR-Sum of Boxes, I think that we are -- I just want to be clear that we do believe that there is -- the lowest dose has the largest and most substantial effect as of now. We will continue to examine this at the 24-month time point that we've called out. We think it's important. And so we'll have to see how that evolves.

But as of now, we believe the low dose is distinguishing itself. And so that's important. And I think iADRS gives us confidence, right, because we included a [ safety ] literally of all cognitive and composite endpoints that other trials in the anti-amyloid have ever used, and we see a consistent signal and consistently better at the lowest dose. So there may be an overlap in some, but we think that the lowest dose is distinguishing itself. And actually, for CDR-Sum of Boxes, even the absolute change at the 18-month time point of about 0.54 is quite impressive. So we're continuing to see whether that will evolve. But yes, we think the lowest dose is declaring itself.

We'll go next to Chris Schott with JPMorgan.

This is Taylor Hanley on for Chris Schott at JPMorgan. We were just wondering, can you give some thoughts or color on how you're thinking about the commercial potential for diranersen versus LEQEMBI and Kisunla just when you're comparing both their efficacy and their safety profile?

Sure. It's a great question, and it's one that we've thought about. I mean just stepping back, we know that about 6.5 million patients have Alzheimer's disease. This number keeps growing. There's an annual incidence of about 500,000 patients. I think the anti-amyloids have really done a valiant job and continue to -- this market continues to develop. And specifically, as blood-based biomarkers come in, we think that diagnosis rates will increase.

The important thing to remember about an anti-tau agent is that we think it offers a different therapeutic modality for patients who have early Alzheimer's disease, and it's actually quite proximal to their development of symptoms. So while it's early to really paint the whole treatment landscape, we think that this is quite a large market, and there will be different patient segments, and as Diana mentioned, who may be typed on a different biomarker profile and would be suited to different options.

For example, while the CDR-Sum of Boxes at the 18-month time frame is consistent with the anti-amyloid, we haven't yet seen the 2-year data, and we know that the other cognitive endpoints are orders of magnitude different. So how will all of this evolve at 24-month time point? What will the Phase III show? And how will we design that Phase III? Those are the questions that we're trying to tackle. But we think there is an important role for a therapeutic modality that tackles tau.

And I think that we are also looking and very cognizant of the fact that if we are successful in Phase III, we would launch into a space that does have anti-amyloid treatment. So how do we tackle that? What data do we need to generate to ensure that prescribers are comfortable when they think about all these different patient profiles and treatment paradigm. So I think it's the totality, but we think this is a large opportunity. It's obviously a few years away. We're just at the threshold of starting a Phase III. So a lot of work ahead of us, but we believe it's going to be an important and exciting opportunity.

We'll go next to Mohit Bansal with Wells Fargo.

This is Sadia Rahman on for Mohit. Just wondering if you've looked into any subgroup analyses here yet and if that might give you more confidence that any of the small baseline imbalances, for example, on CDR-SB or CDR global scores here might not be driving any differences in these responses between the different doses?

So it's a great question. And we showed the sort of overall demographics of the patients and the differential in the different dose groups. It's pretty well done for a small sample size, but you called out a few small changes. I think due to time constraints, we weren't able to show everything and that analysis -- subgroup analysis is ongoing. But what I can say is based on what we've been looking at so far, we're seeing efficacy across those patient profiles. So we're obviously ultimately going to consider presenting those things, but there's nothing that we're really seeing differentially at this time.

And I think overall, we're just seeing very consistent overall trends. We've also looked specifically at some very important subgroups like the APOE4 carriers, and we know that there's a differential in terms of can anti-amyloids -- are they being used to treat that population? And actually, we see consistent trends across. Small numbers in a small trial, but quite consistent trends.

We go next to Andrew Tsai with Jefferies.

It's pretty obvious that the low dose is doing the best out of 3 arms. But a bigger picture question could be that can you guys name some CNS neuro drugs that have succeeded clinically and commercially despite having a lack of dose response. Just wanted to get a sense of how common actually this phenomenon might be in CNS.

We couldn't understand the question. We heard your first part where you acknowledged that the lowest dose does best, but we didn't hear the question. Can you repeat it slowly?

He might have muted his line. What I think I heard was that is there a precedent in other CNS [ drugs ] shown a dose response. And I think there are certainly examples where efforts are taken to examine whether or not a prespecified dose response is met. That hasn't necessarily been seen, but the efficacy shown allows you to move to Phase III. And so here, again, this is the first time anyone's early been able to engage tau in this way. You saw a lot of our doses are kind of close together in terms of target engagement and tangle reduction.

And so what was important for us was to say, do we believe based on the weight of evidence across all the biomarkers as well as key secondary endpoints that we have a dose we can move forward. So it's really that go-forward position that the confidence in identifying that dose. I hope that answers what we thought we got most of your question.

I'll just add that we also were taking this assumption from the anti-amyloid, which have really been the only successful drug development programs for Alzheimer's disease. But there is a fundamental difference with amyloid, we are looking to clear all of it. And with tau, we are not looking to clear all of it. Instead, we're looking to find a sweet spot where we have benefit risk because tau does have a role in the normal physiology of the brain. So there could be fundamental differences in the biology and that could contribute to the lack of dose response, which was set up as the primary endpoint.

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

This is Alex von Riesemann on for David. We wanted to briefly touch on the Alcyone acquisition you made last year. You've previously said that you were exploring the device for SPINRAZA, but we're just wondering if Biogen has an appetite to use the device for diranersen? And how do you think this may change its role in the treatment landscape relative to a traditional intrathecal and other IV or subcutaneous options?

Yes. It's a great question. And that ThecaFlex device, as you said, from Alcyone is something that could be an option that we could build into as we're thinking about designing the Phase III, which, as Priya said, is still under development. And for patients with Alzheimer's, they may, particularly for twice yearly administration, want to have different options. For some patients, they might say going to the doctor and having intrathecal twice a year is fine. Others may say, have complex spine or they may just say their families may say, if I can have the option of an indwelling catheter, that just makes things easier. So what's great is that hopefully, we can have the opportunity to offer for patients and families the decision to make on their own.

We'll move next to Emily Field with Barclays.

I guess I wanted to follow up on one of the answers you just had about, I guess, targeting that tau sweet spot, I guess, because diranersen lowers tau indiscriminately both the physiological and pathological. Is that what creates that sort of 60%, I guess, ceiling on lowering tau? And do you think that that's as far as you can go without impacting the physiological tau?

And then secondly, you flagged baseline tau variability as a possible driver between some of the cognitive outcomes that you showed today. And I was just wondering if you're planning on including baseline tau as a stratification factor in the Phase III or how you plan to explore the impact of that in the future?

Yes. Maybe I can address the first part, which is, yes, I think that the short answer to that is no one knows this for sure, and we were testing it in Phase II. What we know from the biology, we were never looking to clear all tau. That was never the goal. And I think that we wanted to test the doses and the regimens to see whether we could isolate the right approach. And that is where I was referring to the sweet spot because it's possible that 60 milligrams twice a year gives us that sweet spot. And so we're really happy that we have been able to identify that in Phase II, which was really a dose-finding study. So yes, we think there is a sweet spot, and we think that, that is exactly what might be emerging here.

Regards with baseline tau and how we're thinking about Phase III, I'm going to turn it to Diana. We are thinking about this very deeply.

Yes. So I think one of the things that we are obviously going to bring this into a much larger study, and that study will allow us to do additional analyses with much bigger sample sizes where we can look across multiple components, as we said, we can look at baseline tau levels. We can look at also multiple other covariants to sort of further elucidate what that relationship between impacting tau is on its own as well as relative to other covariants. So that's something we absolutely will continue to assess in our larger Phase III as we move forward.

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

So acknowledging you have to finish the end of Phase II meeting with the FDA, when can we expect Biogen to kind of disclose what the Phase III design will be and obviously, therefore, the start of the Phase III? I guess do we have to wait for the long-term extension to complete?

Go ahead, Diana.

Yes. So just to answer the first question, no, we don't have to wait for the long-term extension to complete. That just allows us to further characterize over time what the changes are. And then in terms of when, you can imagine, we're very busy thinking about and designing all the components of the Phase III and pulling that information together. So we're not prepared to give specific guidance on that today, but we'll certainly keep folks updated as we lock in that plan and engage with regulators.

Yes. And having an end of Phase II meeting at earliest is of paramount importance. So we're really working towards that while in parallel, we're waiting to collect a little bit of that long-term data. This long-term extension goes beyond the 24 months for all patients. It actually goes out to 2 years, beyond that. So no, we wouldn't be waiting for that at all.

And just the last thing to build on is while regulators of paramount importance to us, you can imagine here at AAIC, but -- and subsequent to that, we're engaging very intensively with key medical experts, advocacy groups, patients and families so that we understand we can design a trial and ultimately sort of launch a therapy, hopefully, that meets the needs that they have. So if there's a lot of voices that we're listening to and incorporating it to figure out the best we hope...

And this regulatory approval is just one of our many goals. We are really looking ultimately to have a drug that will be meaningful to patients and prescribers.

We'll go next to Phil Nadeau with TD Cowen.

Two from us. So I guess, first, on the ADCS-ADL-MCI, any thoughts on why there was no separation in that endpoint? It is somewhat different than what we've seen for the beta amyloid antibodies? And then second, on the inverse dose response, is it possible that the increase in adverse events like infusional state at the higher doses could be obscuring some of the treatment effect on cognition and function, and that's why those doses don't quite measure up to the low dose?

Yes. On the first one, I think on the ADCS-ADL-MCI, it's a great question. It is behaving in a pattern that is different from the other 5 endpoints. So it's something we need to continue to examine over time. And we haven't seen an effect yet. As I think I mentioned earlier in the presentation, it's something that we're wondering. Is it something that could lag? We're not sure. We do believe, however, that function is being impacted because we are seeing in the CDR-Sum of Boxes scores on function as well as on the iADRS composite endpoint with function, which incorporates function that we're seeing it. So it does have a different pattern.

We'll continue to examine it. We did see function in the Phase Ib coming later. So all good questions. And hopefully, over time, that will become more clear. And I think your other question was around the dose response. And so I think what we would just like to highlight again is that across all the doses, diranersen was favored. And as Priya said -- and that was across almost every endpoint with the exception of the one we just talked about. But we do see that 60-milligram looking optimal in terms of impact on these endpoints as well as tolerability. So that idea of having a dose that's twice a year that's well tolerated is an attractive proposition for us to be considering moving forward.

We'll go next to Jason Zemansky with Bank of America.

Congrats on the progress. I wanted to follow up on one of your earlier comments, but could you characterize the distribution of CDR-SB responses within the low-dose cohort? I mean, were they relatively consistent? Or did we see a range across the participants? I guess what kind of supports the idea or the reproducibility of the observed benefits given its smaller size? And then I guess, beyond the biological variables discussed, could some external issues such as like selection of the sites have accounted for some of the variability that may have influenced the results?

So maybe we'll take that first question. We did show and break out for you on the podium side, and we can send it back around if you don't have it. But for the low-dose group, slowing ranging from 20% to 42% on cognition and 21% to 29% on function versus placebo. And so you can see like that 60 dose group how it performed compared to placebo as well as how it performed compared to the mid and the high dose, and that's on both cognition and function. So hopefully, you can see all that data that we showed.

And then on sites and external, you can imagine we spent a great deal of time training our sites and looking and clearing all the data. So I think that is not something that we believe is an issue here. We're really trying to isolate what sort of biology -- biologically, how we're manipulating tau and could there be a differential impact clinically. And so that's why the dose ranging was designed actually to answer this question.

We'll go next to Myles Minter with William Blair.

Congrats on data. Just the cadence of discontinuations in the high dose, like what was that? Did most people drop out in the first 6 months? Or was it pretty even over it? And then I just wanted to clarify something you said about the confusional state cases in the high dose. I think you said mild to moderate self-resolving happened within the first few weeks. Presumably, that is happening well before you get material tau knockdown as you've shown with your CSF and PET scan data. Just wanted to confirm that.

So in terms of your first question, that's correct. Most of the AEs -- the most common AEs were procedural pain or post-lumbar puncture syndrome and then this confusional state, which had a higher incidence in the higher doses. But of the patients who experienced that, most were mild or moderate in severity, nonserious. And you're right, it occurred pretty approximately to the lumbar puncture timing, so within 7 days, not weeks, but within about a week and then resolved within about another week. And so typically did not lead to study drug discontinuation.

In terms of what that means, I think, yes, your point is very interesting, right? That would be too quick as you can see from the biomarker engagement studies, it took time. It takes time basically for the ASO to stop the production. And then once the production has stopped to see the resolution of the tangles, that would not necessarily line up with acute and reversible impacts on confusion. So definitely an area of study for us. But yes, it is not something that's correlated with tau.

[ We have time for ] 2 last ones. Maybe let's go to the next one, please, Jess.

Certainly. We'll go to Yatin Suneja with Guggenheim.

This is Delma for Yatin. So following up to previous questions on baseline characteristics, did you identify any opportunity to enrich for a specific drug stage or baseline tau PET cutoff or other parameters in Phase III? And are you planning to include patients under treatment with LEQEMBI in Phase III?

So I think you had 2 questions. The first one was around baseline characteristics and overall block stages. So as you can see, what we showed and has been showed across others is it was a tau sub-study, and so we'll continue to sort of show the data, and we had previously published with the baseline tau levels were. And as noted, there is some variability as well as everyone had their amyloid, we have this understanding their amyloid substudies as well.

And the majority of patients were in that 85 to 95 centiloids of amyloid. So we have both tau and amyloid to examine over time. And so we'll be thinking about how to continue to characterize those moving into Phase III. But it's something that I think we have a pretty good understanding of, from ourselves as well as the field, the sort of overall burden of both tau and amyloid in these mild AD and MCI patient populations.

And at this time, we wouldn't consider any enrichment.

Yes, I think it's probably -- at this point, we wouldn't necessarily want to restrict ourselves to that enrichment because we're still understanding in the first place, what engaging this target can do clinically. And so we'd rather sort of examine across MCI and mild AD, what impacting tau can do clinically. So we want to gather all that data. We did have prespecified subgroup analyses as part of our statistical analysis plan to help us look at the different cohorts. But overall, we would keep them.

And I think your last question was about LEQEMBI, right, and sort of the idea of co-administration. I think we said at the -- earlier in the webinar here, we're absolutely thinking about, first and foremost, engaging on the tau monotherapy because we have to establish in Phase III what the impact clinically is with this dose and, of course, safety and further characterization. But we know that we're going hopefully to be launching into a field where patients are using potentially sequential or one at a time based on personalized biomarkers.

So definitely a thought for us, something that we're considering in a total development plan, how we'll be characterizing both. So must establish the monotherapy impact, definitely thinking about a future state of sequential and combination as well and how we can develop data around those.

Jess, conclude with our last question, please.

Certainly. Our last question comes from Jay Olson with Oppenheimer.

Based on the totality of data that you've now collected for LEQEMBI and diranersen, what is your current hypothesis on the relative contribution of amyloid versus tau to long-term disease progression? And then separately, could you describe your clinical definition of the confusional state? And why does it seem to be dose related? Would you consider it an on-target or off-target side effect of diranersen?

So I can take that last part first because we -- I think we've addressed it a little bit earlier. The temporal relationship of the confusional events being sort of within 7 days of dosing and resolving within 7 days after that would not be expected to sort of be consistent with the impact on tau. It takes time. Again, MAPT ASO is stopping the sort of moving the -- we have to reduce the protein overall. And then we see -- by reducing the amount of protein, we see ultimately the clearance of the tangles in the brain. So that temporal relationship is not something we would necessarily say is due to tau lowering per se.

And I think your first question was about the sort of how would we characterize the confusional sort of events. And I think we had said mild to moderate acute and onset and resolving typically within a week. And the last was about the relationship between amyloid and tau. And it's a really exciting time to have multiple sort of mechanisms of action that we can see how they intersect with Alzheimer's disease. We're going to be generating our own data with LEQEMBI, looking at preclinical and seeing what manipulating amyloid preclinically is.

And then we are also going to be obviously here some of the first people to see what over time, which long-term extension study will help us do as well as a Phase III, what the ultimate impact of reducing tau can do. So time will tell more of these stories across the entire sort of spectrum of Alzheimer's disease. And what's exciting is to be at a time where hopefully, we're able to sort of get at both amyloid and tau.

Okay. Thank you all for the excellent questions. I mean maybe I'll just close with a couple of comments here. I just want to point out that this is a very exciting data set for us. And the reason that we are excited is that we are seeing a drug that is really hitting on a potential regulatory endpoint as well as cognitive endpoints and on the cognitive endpoints, treatment effects that we haven't seen so far. We think we've isolated a dose that is emerging as a dose that could go into Phase III. This drug also has the potential to be administered twice a year.

And I think it's supported by unprecedented biomarker data, specifically the tau PET data, which points to tau pathology reduction in the brain. And so while, yes, we didn't hit the dose response, we think that the data set is very, very encouraging with clear signals. And we think that the data in totality really makes complete sense for us to forward this to Phase III. And so that is what we are working with urgency on. And I'm sure we'll be here to talk with you again and share updates as we make progress.

So I want to thank the team here that is joining me today. Thank you, Tim. Thanks, Diana.

We'll end the call there. We try to [indiscernible] more questions.

Thank you.

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

Today's Annual Healthcare Conference in very [ toasty ] Las Vegas. My name is Jason Zemansky. I'm one of the mid-cap analysts here at the bank. Very pleased to have joining me Biogen and specifically Adam Meyers, Head Immunology and New Disease Areas franchise. So Adam, thank you so much for joining us.

Yes. Thanks for having me.

Maybe for those of you who may be less familiar with your role at Biogen, could you please provide an overview of your focus within the organization?

Yes, absolutely. And as we open the session, just disclosing, obviously, I'll be making forward-looking statements, suggest folks looking at risk factors we outlined in our SEC filings. But yes, very happy to be here. I've been with the company actually about 14 years, and I'm leading our Immunology and New Disease Area Franchise. And really immunology is a growing space for the organization. And my team works to lead our late-stage immunology programs cross-functionally in PrEP to bring these new assets to market.

Biogen seems to be making more of a deliberate pivot towards immunology. Certainly, Chris has spoken a lot lately about multiple sclerosis being not only a neurology-based disease, but also an immunology-based disease. And so can you expand on how, I guess, you and the organization as a whole envisions immunology fitting in moving forward?

Yes, absolutely. I mean immunology is obviously a broad area treated by a variety of specialists. But when you look at Biogen's history and really the field of MS history in MS, most of the therapies that have been brought forward are really targeting an underlying source of inflammation that is causing multiple sclerosis. And so the time that we've spent building expertise around the biology of MS helps us as we expand into new areas of immunology with different specialty call points.

When you look actually at some of the therapies currently used for MS, something like a CD20, obviously, there's a lot of interest in BTK inhibition. These assets are being studied not just for MS, but a variety of autoimmune diseases. And so the history that we have in MS, the research team that we continue to expand, some of the expertise that we've been acquiring through business development, all of these things position us well from an immunology perspective.

Maybe just to delve a little bit deeper. I mean, what specifically aligns with -- in immunology with the company's core capabilities? Is it more on the research side? Is it something else?

Yes. I mean I think that certainly, it has started from an R&D lens. We certainly have the capability to develop therapies with underlying I&I type implications. But beyond that, I think it translates very well also into medical and commercialization. So when you think about MS, obviously, the main call point there is an MS specialist. And we've been very successful with the portfolio of therapies for MS over the past many years.

And so from a commercialization perspective, not just a scientific perspective with the shared underpinnings, the ability to build a portfolio, build a set of relationships in a specialty space with customers follow science, demonstrate that we can build value. And frankly, some of the underpinnings, things like patient services. And we really have some world-class patient services to enable education and access for patients. All of these things, I think, are immediately transferable from what we've done, say, with an MS neurologist to a rheumatologist for lupus or a nephrologist for IgAN.

As you think about moving forward, how willing is the organization to stretch? When you think about some of the parameters of an I&I-based disease, while it might align biologically, pathologically in terms of the market opportunities, they're a little different from neurology and rare diseases. They tend to be much more competitive, patient population is much more heterogeneous. Help us walk through some of the puts and takes here.

Yes. I mean I think, look, there's always synergies in -- being in the call points you already have. There's no doubt about that. But obviously, we needed to diversify beyond neurology. And I think you can see demonstrated where there's good science and a substantial unmet need, we have been willing to go towards, in particular, nephrology as a new area. And so I think willing to stretch, but in the end, the science and the patient need have to guide that this is a place Biogen is really well positioned to uniquely bring value to the patient and physician community.

Got it. Well, let's turn to certainly the pipeline. The next potential commercial asset, litifilimab has 2 Phase IIIs that are reading out for SLE. Lupus is a challenging indication. So what do you think you need to show to differentiate the profile, whether it's skin joint or SRI-4?

Yes. I mean I begin by reflecting on our Phase II program, and we were able to run a 2-part Phase II study, one in SLE patients with skin activity and another in CLE patients with or without SLE. So we really were able to study a very broad spectrum of patients with lupus. In the SLE part, the primary endpoint was focused on joint. And the reason being joint is the other most common manifestation of lupus beyond skin. And so the idea is through demonstration of proof of concept in being able to reduce joint activity in that part of the study, complemented by the CLE side of the study and also measuring skin in SLE patients, we had proof of concept in both skin and joint disease.

In the SLE side, we also did measure the primary endpoint we're now using in Phase III. That's called the SRI-4. It's probably more complex and not as clearly understood in clinical practice, but it is the regulatory endpoint. And we saw a treatment effect in Phase II on that SLE SRI-4 of over 25%, which was very marked. And so when you think across these 2 areas, entering a lupus market that is growing and will probably become very crowded over the next few years, and I think we're on the precipice of tremendous gains for our SLE patients and potentially creating a new CLE market, I think we feel very good about where we are.

It is a heterogeneous disease, but these study designs have been very thoughtful, and we have taken really the best of the Phase IIs and the confidence we gained and implemented that into the Phase III program. So what do we need to see from that Phase III program to think that we're successful? I mean really, when you think about these patients, an SRI-4 does not mean a whole lot to them. It may mean something to the physician, but that physician is looking to protect their organ systems. Obviously, it's a multi-organ impacting disease.

But the patient, what we hear from them is I just want to be able to approach every day and live my life. So that comes to fatigue, reducing pill burden. On the cutaneous side, obviously, there's a huge psychosocial impact of very visible scarring lesions. So they just want to be able to engage in their life with their family, their job, their community. And so I think what you'll see is, of course, we're going to focus on skin, joint and those composite endpoints. And I do think that litifilimab has the potential to be very, very competitive and certainly superior on the CLE side to no option being available. But I think we'll have to complement that with additional patient-focused data coming out of Phase III.

So in terms of the actual SRI-4 outcome, I mean, what should we look for come Q4 here? I mean what level of benefit here would be enough to differentiate, as you said, the level there that you think you could drive a pretty sizable commercial outcome?

Yes. I mean, ultimately, SRI-4 will be one piece of the puzzle. When you look at the current competitive set, that is already approved, SRI-4 outcomes or BICLA, which is a similar composite outcome have usually been in the low to mid to maybe upper teens, and we saw 27%, I think, in Phase II. So ultimately, that's a piece of the puzzle, but I think that number alone really isn't going to be, in my mind, what drives use of litifilimab.

The totality of the data, the potential from a safety profile perspective of having a very targeted mechanism of action, blocking production of problematic type 1 interferon from these pDCs versus broad blockade of interferon, which does have some positive benefits or heavy B-cell modification or depletion, there's some potential benefit from a safety perspective as it relates to infections and other things. The convenience factor is going to be very real in this patient population.

And so right now, we're at subcu monthly delivered at home. That is very different than a weekly subcu or an IV therapy. So those components combined with a breadth of efficacy across skin, joint and hopefully some good patient-reported outcomes, I feel like litifilimab is in a good position relative to incumbents and even other products in later development.

If litifilimab performs as expected, how do you think it will compare to dapirolizumab in SLE? Is there an ideal subpopulation in SLE for each agent? Or is it more of a staging question?

Yes. I mean we're very fortunate to have 2 late-stage assets in the portfolio. In fact, right now, that is an anomaly in industry. And that's because we actually believe lupus is heterogeneous enough as a disease that one therapy is not going to be the answer for all patients. So for us, it's really more about complementary and building a portfolio with options for patients than it is about viewing or comparing and contrasting the 2 assets.

When you think about what dapi was able to show in its Phase III study with the second study due to read out in 2028, you saw a breadth of efficacy and certainly some nice response on composite endpoints, but you saw the ability to reduce steroids reduced disease flares. You've seen nice impact on fatigues. These are things that you will see out of a larger Phase III study. And so in the end, in a -- there isn't a one-size-fits-all therapy and thinking about how we've been successful with MS in developing a portfolio, the option is really what matters.

I don't think at this point, the world of biomarkers and patient segmentation in lupus is strong enough to say it's easy to pick the right patient for a product, but having multiple options, litifilimab more on the innate immune system side for those that have type 1 interferon perhaps driven disease, dapi more on the adaptive immune system targeting B-T exchange and that type of signaling gives you the ability to perhaps provide some judgment as to right drug for the right patient.

I think Jackie from the team has a follow-up on the Apellis deal.

Yes. So switching over to BD. So as you think about the Apellis deal, Biogen has focused a lot on its outlook for both assets. But can you give us more of a sense of the commercial implications or benefits as you build out a nephrology franchise?

Yes. I mean, obviously, pending close of that deal, the intent was to do 2 things, right? One, it does represent new products, growing products that can add to top line revenue. And the other for me that sits with these pipeline products that I'm especially enthusiastic about is the expertise coming from Apellis and the established field force. Nephrology is an area that has really exploded in activity for the past few years, but the number of people that have deep expertise in nephrology, especially working in the field building relationships is very limited.

And that's something that we would have built, but Apellis immediately brings. When you think about the broader opportunity, I think when we think about the next couple of years, somewhat in line with consensus, we think these products can grow in the mid- to upper teens space. SYFOVRE, obviously, it's really about building what is an underpenetrated market and educating on the value of staying on therapy.

With EMPAVELI, it's very early in its launch cycle. It has a broad label. It is a rare disease. We obviously have a lot of experience in that space, and we do see a progressive linear growth that is consistent with other rare disease products we've commercialized over the longer term. So between what it does in terms of near-term revenue and then also preparing us with a field force for felzartamab is a really, really valuable set of attributes.

Chris mentioned felzartamab a lot in his discussion following the acquisition. So I guess drilling down a little bit further, what particularly -- what asset -- what about these assets or the infrastructure will be key to unlocking felzartamab's potential?

Yes. I mean I think in terms of unlocking felza's potential, obviously, really enthusiastic about entering this growing nephrology space. Certainly, I think that looking at felza and its unique CD38 targeted biology, along with now what we have coming to us from Apellis, really, our job is to conduct these late-stage programs well, make sure we do the right disease state education, especially as we try to build a new AMR market, understand how we can differentiate in IgAN. And so as we build out that strategy and complement with a talent base, I think we'll be in a very nice spot.

Over the years, Biogen has advanced a number of ophthalmologically based assets. Does the acquisition and specifically SYFOVRE signal a renewed plans to enter this space?

Honestly, I think that really, you have to look at the acquisition holistically. And obviously, I've spent time sort of emphasizing the nephro side of it and really what we believe is a significant growth opportunity with EMPAVELI. And so I think those synergies are probably a greater driving force. But certainly, I think Biogen has proven on multiple occasions that, again, where there's science and where we think we have a unique ability to provide value to patients and payers, certainly, I think there's always that possibility. And a lot, I think, will be dependent on how SYFOVRE performs and then what else appears in potential pipelines.

Got it. Maybe pivoting back to felzartamab. You're looking at 3 different opportunities. So AMR, IgAN and PMN. What's the evidence for CD38's broad role in these indications? And what gives you confidence it's going to be efficacious in each of these?

Yes. I think it really is something I would dichotomize between transplant, which is AMR and MVI, which we opened the Phase II registrational quality study in as well and then more on the GN side of things with IgAN and PMN. So I'll maybe start with transplant and specifically focus on AMR. So this is a space where with AMR, there's potentially 11,000 patients. AMR is a leading cause of kidney rejection.

And obviously, that's highly problematic because you think about the patient experience, usually, there's some form of kidney dysfunction or disease that has led to the need for dialysis in a transplant and that is not only an expensive proposition for the health care system because these transplants in the U.S. average about $450,000, but it's a really, really terrible experience for a transplant patient who has basically been given the gift of life to immediately find that over time, they're developing AMR.

And so certainly, CD38 in this space and targeting and depleting the plasma cells appears to play a strong role. And when you look at the Phase II data, we were fortunate to see about 80% of patients having a reduction in disease activity and actually about 2/3 having full resolution of AMR, and that's biopsy confirmed. So that's a really, really strong indicator coming out of Phase II that will hopefully replicate in the ongoing Phase III study with 120 patients.

On the IgAN side of the equation, obviously, a very active space. And the common question is, how will you compete against APRIL BAFFs and what is happening with these first few accelerated approvals and probably several to come. But CD38 biology is quite different in this space. So you're talking about, again, depleting plasma cells that are CD38 positive and in doing so, we know those plasma cells are creating the autoantibodies that lead to the immune complexes that are finding themselves on the fold of the kidney and impacting kidney filtration. So it is those plasma cells creating that effect.

So really targeting the direct source of the disease, whereas these APRIL BAFFs or broader B-cell modulators, but maybe not as directly implicated in the production of these autoantibodies. And so between the unique mechanism, some of the unique constructs of felza, so for instance, lack of CDC potential implication for longer-term chronic use, the fact that felza has a chronic tox and repro package that most CD38s do not. These things will hopefully provide some data to reinforce safety.

And ultimately, we think the CD38 biology will play a strong role in treatment of IgAN. And additionally, when you look at that Phase II data after the initial course of therapy over 5 months, you have patients showing potential durability out to 2 years. So whereas an APRIL BAFF is a chronic therapy, weekly, twice weekly, maybe monthly, you can take felza over the course of 5 months and then potentially not need another course of therapy out to 2 years.

Got it. Maybe one quick follow-up on IgAN. Does this mean that you think felza is a replacement for the APRIL BAFFs? Or is it something that could be used to complement them?

Yes. I mean, -- it's hard to think about combo therapy at this point. I think it's early days with the APRIL BAFFs. I think when you combine immunomodulators, there are things we don't understand. I think that at least to start, the view is this is a very viable alternative to an APRIL BAFF based on the Phase II data, we saw roughly 50% reduction in proteinuria.

That's very consistent with what these Phase III programs have been demonstrating for their accelerated approvals. Time will tell on the EGFR. But I think the idea is it is a potential choice that, again, targets CD38 as a key mechanism of disease and potentially provides durable treatment outcomes rather than sort of constant chronic therapy.

Got it. And then pivoting back to AMR. I guess, what do you need to see from the data to feel optimistic about kind of the broader opportunities of an anti-CD38 monoclonal?

Yes. I mean I would say that as I think about this development program in general, I mean, AMR is a very different disease than IgAN. And so successful efficacy in AMR will be confidence inspiring, but not necessarily predictive of a positive IgAN outcome, for instance. I think what we will learn is, one, we'll get a much better sense of the safety profile through larger studies.

And then from a dosing perspective, from a PK/PD perspective, things we learn in AMR may help us understand some of the PK/PD that we can anticipate in the IgAN program. So in some senses, distinct opportunities, but some of the foundational information we'll get from AMR should help build confidence for IgAN to follow.

What fraction of the, as you mentioned, 11,000 transplant patients could benefit from an agent like this?

Yes. So with these 11,000 patients that are developing AMR, we know time to onset median is about 2 years. We know over the course of a decade, probably 75% of them are at risk of losing their graft and hence needing to go back to dialysis or needing another transplant. And again, I think about that in terms of not only that patient and needing a new kidney, but what it means to a patient that otherwise would be waiting for that next kidney.

So clearly, treating AMR benefits the patient and future patients. But I think on the whole, when we think about this, it is -- AMR is a leading cause of kidney rejection in the 25,000 transplants a year. The prevalence is about 11,000. How many will stay responsive beyond the data we've generated thus far, very contingent on the long-term studies, but obviously, very appreciative of the results we've seen in the Phase II and at least getting to that high efficacy rate.

Is there a chance that they could hold off rejection indefinitely? Or do you think that there's -- at some point, it's going to happen?

Yes. I mean I think the premise is with the dosing regimen we've placed into Phase III, the goal, of course, is for this to be chronically there to hold off rejection indeterminably. We're going to have to obviously follow these patients in the Phase III program for much longer to see if that plays out.

Got it. Let's finally pivot to -- you have a number of upcoming proof-of-concept readouts, I think, that are somewhat overlooked. But let's focus in on BIIB091. So this is your BTK inhibitor. What prompted the reinvestment in MS after essentially not investing that much in the space for some time?

Yes. I mean what I would say is I probably don't characterize it as a reinvestment. We've been working on BTK inhibitors for MS continuously since -- well, as long as I've been working in immunology at the organization. Obviously, finding the right BTK given what we've learned about covalent versus non-covalent, potential hepatotoxicity, all of these things play a role in what would make for a BTK with the right benefit risk profile, not only for MS, but potentially more broadly in autoimmune diseases because we know these BTK inhibitors are being used more broadly.

Additionally, on top of that asset, we do have a BTK degrader. So would degradation provide advantages versus inhibition. So that readout is pending midyear, and we will provide an update on it. I think the idea being very much though that this is really just a continuation of the work we've been doing and BTK inhibition has been one of the more promising areas for MS.

So on VUMERITY and the legacy portfolio, they've continued to do well. How attractive an area of growth is the landscape still for the company?

Yes. I mean I think VUMERITY has certainly done very well and certainly happy to see that it is continuing to grow. It's the #1 prescribed oral branded oral in the U.S. It's fair to note that the other products in the MS portfolio have still been undergoing that slow decline. I would say, in general, the RMS patient is probably more well served than patients with progressive disease, in particular with that type of disability progression.

And so I do think opportunities remain, in particular, in that space when you can find the right molecule with the right safety profile. And so we'll see this data set shortly and looking forward to sharing what we think are the appropriate next steps for the asset.

Can you just give us an idea of the benchmarks here. I mean, what does it take to compete essentially given that a lot more new agents have launched in MS?

Yes. I mean, on the RMS side, I think what we've seen is there are several good agents that really control formation of new lesions, right? So you have to meet the bar that is already set by the heavy players in the field. On the progressive side, even the products approved for progressive MS seem to be working more in the patients with active lesions versus the patients without active lesions who are still seeing disability progression.

So I would say the bar is lower in that space because there's limited treatment options. And ultimately, again, even the things that have been successful are really more in an active type of patient than not. So it's hard to give you a specific bar in that type of patient because the efficacy is pretty modest.

All right. Well, we're heading up on time here, but maybe just to finish things. Given the new focus on I&I, I mean what part of the portfolio do you think that's going to look like in a couple of years, understanding a lot needs to play out?

Yes. I mean, as I think about it, I have been fortunate to work in I&I at Biogen for 12 years through the ebbs and flows. And what you can see, especially under Chris' leadership is the diversification of our portfolio. Obviously, one of the great benefits about targets in I&I is they have multi-indication potential. They have the ability to generate proof-of-concept data sometimes in weeks or months rather than years.

And so I think we'll continue down the path we have of making select investments where we really appreciate the science and find a disease where there is less saturation and substantial unmet need. And ultimately, that just brings more balance to the portfolio that we have. And so I think the future is bright for I&I at Biogen starting with the lupus readouts end of year and going into next year with felza for AMR.

Perfect. Adam, thank you so much for joining us.

Yes. Thanks very much for having me.

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 First Quarter 2026 Earnings Call and Business Update. [Operator Instructions]. Today's conference is being recorded. Thank you.

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

Well, thank you, and good morning, and welcome to Biogen's First Quarter 2021 Earnings Call. During this call, we will 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 we encourage you to review.

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

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

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

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

Thank you, Tim. Good morning, everyone. So we've had a very strong start to the year. And I was thinking about where we have been as a company in 2023, we had just completed 4 years of declining revenue and profit. And since then, we've been able to pretty much stabilize the business. And -- that's really been a huge amount of work by all of our teams. And the interesting thing about this business is it's not enough to just trim some cost, and we did have to cut some excess cost.

But one of the things that we have really been doing is going through every single line of the P&L and thinking about are we investing for growth? Because you do have to invest in this business. You cannot save your way to prosperity. And so there's been a lot of really careful thought about how do we invest for growth, be it in research and development or in commercial.

And as Robin has talked about in the past, we actually have shifted a lot of costs. 90% of our commercial costs were really behind the MS portfolio in 2023. And by shifting that to our growth products, I think one of the things you see here on the first slide is that the growth products are now generating $850 million in the first quarter, and that's up 12%. And the 12% is actually even a little bit of an understatement because SPINRAZA declined slightly.

Now SPINRAZA declined mostly because of the timing of shipments and there was a one-off event last year on VAT, I think, in Europe somewhere. But remember, timing of shipments is a big thing at Biogen. Out of the 15,000 patients on SPINRAZA that we treat every year, about 9,000 are ex U.S. And in a lot of countries, we only ship once or twice a year into those countries. So it tends to be lumpy by nature. What is good news is the new high dose SPINRAZA.

As you've seen, this has now been approved in the U.S., and we already have patients on the new dosage regimen. But it has already been approved in Japan. It was the first country to approve the high dose. And then Europe, and we're getting a lot of positive feedback from those countries where it's been launched. Not only is this going to be significant in terms of competitiveness in a highly competitive area. But we're also seeing some anecdotal reports of switch backs.

In this market, whenever you have one of these devastating diseases, efficacy is really paramount. And I think the high dose really should help us have an edge on the efficacy front in this market. So we're very happy to see the growth products growing like that. We look to our major opportunity with LEQEMBI and as you know, over the past few years since launch, a lot has been done to try to improve the care pathway, make it easier for both physicians and patients. And the IQLIK is really is fundamental to that.

Last year, we had the approval for the maintenance indication -- and you'll see numbers where we have significant numbers of patients who are continuing on after the first 18 months regimen to remove the plaques and going on to to maintenance. We have a PDUFA date of May 24 for the induction subcutaneous. And again, we see this as an opportunity to facilitate the care pathway, improve patient convenience and improve our competitive profile versus [ Gasuma. ] So that's the business, the Biogen business is doing well. And now on top of that, we are the proposed a pellet acquisition. We haven't yet closed, but -- and so we're limited in what we can say. But obviously, this expands our commercial growth portfolio.

There are 2 marketed products. And I'll just remind everybody that this is 1 molecule. It has 3 indications, and it has 2 brands. And as I talked to a number of investors on SYFOVRE, there is this focus on ophthalmology. And what I think a lot of people forget is that geographic atrophy is really an autoimmune disease. And it is caused by the formation of lesions as a result of [ Averen ] immune activity. And what we're really trying to do with geographic atrophy is to prevent the growth of these lesions. So when people start talking about visual acuity, that's probably going to be very difficult because the eye tends to adjust around these lesions. And what really is the goal of treatment is to prevent progression of the disease, which could potentially lead to blindness.

And so I think there's a lot that we need to do in terms of thinking about how we really position this drug and where the benefit is. Empaveli is an enormous benefit to us. we have greater conviction every day on felzartamab, and we look forward to seeing the first data and hopefully that -- those data will realize our aspirations for this product. But if you went back 6, 7 years ago, nobody was interested in nephrology. And now really with the advent of the FDA acceptance of proteinuria as a biomarker, a lot of companies have come into this space. IGAM is obviously the biggest market in this -- and so as we think about recruiting for felzartamab and our prelaunch activities, you're finding that you've got a lot of companies out there that are recruiting in nephrology.

I mean, Vertex is, Vera is just to name a few, for example, -- and so within the belly and with the addition of the Appellate team, -- we have a whole team ready to go in nephrology, and we'll be present in the nephrology offices, building those relationships, going to congresses now with a marketed product, not a future product. And so we believe both in the growth of Empaveli, but what that can do for a whole nephrology franchise at Biogen, and we're pretty excited about that, I have to say. And I think all the conversations that we've been having with the Apellis team leading up to a potential integration.

I think there's -- first of all, there's an incredible talent in the Palace team. But I think it's also fair to say that within Biogen, I think we can probably bring more resources to really support those teams. And I don't see a big inflection in SYFOVRE, for example, but I do think -- there is an opportunity for growing product there. And I think, as I say, Empaveli within a broader nephrology franchise, that could be a game changer for Biogen in the future. So as we look at this, -- we do expect the acquisition to be accretive in 2027. And when you look out over the next few years, this materially increases Biogen's EPS outlook.

And if I turn to the next chart here. Now don't get your micrometers out here and try to measure these arrows here, this is meant to be illustrative of where we think this is going. If we just take what Wall Street thinks Biogen is going to do, I can't say that we would be happy with that, but that's what's out there in the public domain. It's roughly flat through 2030.

Now when you look at what appellate can do is this allows Biogen to start growing now is our belief. And then the pipeline starts to read out. We've got a lot of data readouts already starting this year and consecutively over the years. And as one investor told me said, I get this. before we had a pipeline coming on a flat business. Now I see a pipeline coming on a growing business. And I think that's the fundamental difference in what the Apellis acquisition does for us.

And we're still going to continue to do business development. In all of this, we just acquired the China rights for felzartamab that's an important market for IgAN, but China is a big important market for us. And Biogen has been relatively small in China. China is the world's second biggest pharmaceutical market and so felzartamab and acquiring these rights not only just to acquire the worldwide rights for PELSA, but also really to build our business in China.

So again, we continue to invest in growth, but I think a lot of the investments, a lot of the work that we have done over the last 2, 3 years is now coming to fruition. And at least this is the vision. Now we are very conscious of the fact that business 10% is strategy, execution. And so we need to now execute as a team to bring all of this, but at least this is the aspiration that we have for our company.

With that -- let's talk about that pipeline, and I'll pass it to Priya.

Thank you, Chris. This was a very strong quarter for Biogen from a development standpoint, with meaningful progress across both our marketed products and our late-stage pipeline.

Starting on the left-hand side of the slide, you can see the continued progress in supporting our marketed portfolio. First, the U.S. approval of high dose SPINRAZA represents a meaningful advancement for people living with SMA and reinforces Biogen's leadership in the category. Additionally, in Alzheimer's disease, new real-world data for Leqembi show strong treatment persistence with nearly 80% of patients remaining on therapy at 18 months and almost 70% at 2 years. We believe that these data underscore the importance that patients and HCPs attribute to ongoing treatment of this progressive disease, extending beyond just amyloid block reduction.

Turning to the right-hand side, we presented important new data that reinforce the potential of our late-stage high conviction pipeline. New data from Salanersen demonstrate durable benefit over 1 year in children previously treated with gene therapy, highlighting the potential for high efficacy with 1 yearly dosing.

Importantly, the first patient has now been dosed in the pivotal STELLA-1 study evaluating Salanersen in treatment-naive T-symptomatic infants. At the same time, we continue to build confidence in Litifilimab, where we presented positive Phase II data from the ongoing Phase II/III AMITA study in SLE. All of this progress reinforces our confidence in our late-stage pipeline. And as you can see from this slide, we don't expect to wait long for that potential impact. This year marks the start of a multiyear registrational data flow that includes multiple programs and extends through the end of the decade.

We believe these data, as you also heard from Chris, will continue to strengthen our growth outlook. And importantly, as previously reflected, we have several data-related inflection points in 2026. We -- as you know, we have a PDUFA date coming up for our Leqembi IQLIK initiation next month. We also have readouts from our pre-proof of concept pipeline, where we continue to pioneer and address key scientific questions that could benefit patients.

Our registrational readout cycle begins later this year. And over the next 18 months, we expect to see SLE and CLE data from all the Phase III studies of Litifilimab as well as readouts from the first Phase III study of FELZARTAMAB in AMR and the Phase III study for ZOREVUNERSEN in Dravet syndrome. I believe this is a very exciting time for the Biogen pipeline.

I would now like to turn the call over to Robin for an update on our financial performance.

Thank you, Priya. I'd like to start with key highlights from our strong first quarter 2026 results. Total revenue was $2.5 billion, up 2% year-over-year with GAAP diluted EPS of $2.15, up 31% year-over-year and non-GAAP diluted EPS of $3.57, up 18% year-over-year. We're pleased to see our growth products continue to perform well generating $851 million of revenue, up 12% year-over-year.

Our growth products, which includes VUMERITY, generated more revenue in first quarter of 2026 than our remaining MS products. We also maintained our cost discipline while supporting our late-stage pipeline development and product launches with approximately $1.1 billion of non-GAAP core operating expenses in the first quarter of 2026.

As a result, we generated $594 million of free cash flow in the quarter, allowing us to further support the business and invest in future growth, including the expected appellate transaction. which we believe represents a capital allocation opportunity that will further bolster both our top line and bottom line growth prospects and therapeutic areas aligned to our immunology and rare disease strategy.

I'll speak more about the transaction in a few moments. I'll now turn to our revenue performance for the quarter, starting with our growth products. LEQEMBI market revenue was $168 million for the first quarter of 2026, up 74% year-over-year. We saw a continuation of sequential market growth in key markets, including the U.S., Japan and China.

In China, we saw strong uptake with Q1, reflecting continued demand growth and sequential revenue benefited from completing the drawdown of inventory in Q4 2025. LEQEMBI remains the market leader by total patient share in the U.S., Japan and China. -- and we look forward to next month's U.S. PDUFA date for IQLIK initiation.

SKYCLARYS saw sequential global patient demand growth with first quarter 2026 global revenue of $151 million, representing 22% growth year-over-year. For SKYCLARYS, U.S. revenue was impacted by the inventory dynamics we discussed on the Q4 2025 call with moderate growth in demand, Outside the U.S., we continue to see demand growth as we continue our SKYCLARYS launch.

SKYCLARYS is now available in 35 countries and we continue to expect SKYCLARYS growth to come from ex U.S. as we advance the launch.

Now turning to the highlights of our key P&L items for the quarter. Non-GAAP R&D expense in Q1 2026 was $480 million, with the increase year-over-year, reflecting investments in our Phase III clinical programs including felzartamab and Litifilimab and do phasing of spend within the year. Non-GAAP SG&A expense in Q1 2026 was $600 million with the increase year-over-year, reflecting planned prelaunch activities supporting lupus and nephrology, direct-to-consumer advertising for VUMERITY and ZURZUVAE and due to phasing of spend within the year.

First quarter 2026 GAAP and non-GAAP effective tax rates were 15.4% and 15.3%, respectively. The year-over-year decrease was due to favorable impacts from a foreign tax settlement in vesting of certain share-based awards, partly offset by the increase in U.S. taxation on foreign earnings in 2026 under the one big beautiful bill app.

And as we previously announced, we recorded approximately $34 million of acquired IP R&D in the first quarter of 2026, related primarily to our [ AltiGen ] and Alloy transaction, resulting in an approximately $0.20 on per share impact to GAAP and non-GAAP EPS.

As a reminder, in the first quarter of 2025, we recorded $165 million of acquired IP R&D associated with the upfront payment to Therapeutics as part of our collaboration for ZOREVUNERSEN for the treatment of Dravet syndrome in all the territories outside the U.S., Canada and Mexico, resulting in approximately $0.95 per share impact to GAAP and non-GAAP EPS.

This strong commercial execution, coupled with disciplined financial management drove continued robust free cash flow performance. We generated $594 million of free cash flow in the first quarter of 2026 and exited the quarter with $4.7 billion of cash and marketable securities and $1.5 billion of net debt. With the Apellis transaction expected to close in the second quarter of 2026, we plan to fund the transaction with $3.6 billion of cash from the balance sheet and $2 billion from bank borrowings.

Given our expected strong cash flow generation, we expect to repay the $2 billion in new borrowings by the end of 2027. Given the dynamic policy environment, we have updated the slide we first provided you this time last year.

We continue to believe the structure of our U.S. manufacturing footprint, supply chain and overall business model position us to be potentially more resilient to macroeconomic factors and policy uncertainty. Currently, based on potential tariffs as announced to date, we do not expect to see a material impact to our business in 2026. This information does not reflect the impact of the pending acquisition of the Apellis.

Turning now to guidance. Our overall belief in the strength of the underlying business is as strong as when we guided in February. We also continue to believe it's important to make investments for growth. In addition to the roughly $0.20 EPS impact from the acquired IPR&D charges we incurred in Q1, we also expect to incur $145 million or an $0.80 EPS impact of acquired IPR&D charges in the second quarter.

Specifically, the TJ Bio transaction for felzartamab rights in China, which further enhances our nephrology franchise and gives us worldwide rights to felzartamab is expected to comprise $0.55 of the EPS impact. As Pria noted, we also achieved the first patient dosed in STELLAR 1, our pivotal Phase III Salanersen study, triggering a milestone in the second quarter, which results in approximately $0.25 of EPS impact.

Turning to some key considerations for this updated guidance. You can see that our expected business outlook and underlying assumptions, including our revenue outlook remained consistent with our prior guidance.

As I mentioned earlier, we expect roughly $600 million of contract manufacturing revenue this year to be phased as roughly 2/3 coming in the first half of the year. We expect Q2 core operating expenses to be roughly consistent with Q1. It remains our objective to be disciplined on costs as we continue to invest including supporting the programs that we've been bringing into our pipeline through business development. Please be sure to review this slide and our press release for other important full year 2026 guidance assumption.

And finally, a few points on the expected impacts from the Apellis transaction. The transaction is not yet closed, so we won't provide consolidated guidance today. That said, we do plan to provide 2026 guidance inclusive of the Apellis when we report second quarter results following the transaction's close.

We can say today that we believe we will be getting 2 best-in-class commercialized medicines that enhance our growth portfolio. We believe Syfovre and Empaveli will contribute meaningfully to our top line growth in the near and long term. We expect approximately $120 million to $130 million of impact to our non-GAAP and other income expense line in 2026 driven largely by financing and foregone interest income.

We expect that our strong combined cash flow generation will provide us with the opportunity to delever by the end of 2027 and that the transaction will be accretive to non-GAAP 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.

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?

[Operator Instructions]. Your first question comes from the line of Brian Abrahams with RBC Capital Markets.

Congrats on the quarter. As we look towards the upcoming BIIB080 data, I'm curious to your latest views on like what kinds of signals you'd be looking for there to move forward? And how much would that be impacted by your expected potential to further improve the administration form there?

Priya?

Thanks, Brian. Just stepping back, BIIB080 is an antisense oligonucleotide. It addresses tow and aims to reduce call -- and we've seen that in prior trials, an extracellular approach using an antibody has really not worked. And so that's where the ASO approach is differentiated. We believe it could target both intracellular and extracellular tell. We did see cloud reduction in our Phase Ib was a small trial, which is very encouraging, which prompted us to get to a proof-of-concept study. And that is what the Celia readout will tell us. because we -- this is a pioneering effort and what we're looking to see is whether reduction of now leaves to and translates into a clinical benefit, specifically on cognition.

But as we do that, we're exploring several doling regimens, several treatment frequencies. So we'll be looking at the totality of data. We're expecting the data sometime midyear and I think our goal would be to look at the data and then communicate it and present it at upcoming forums. So that's the plan.

And on the dosing regimen?

Yes. On the dosing regimen, I'd like to say that really, the trial enrolled very quickly from an [ Infratil ] perspective. We recognize that if this actually translates into a medicine we would be considering other options. So we are looking at other options of delivery. These are in preclinical and research and we recently acquired Alceon as you know, and that gives us another potential avenue to explore if and as we continue with implicit delivery.

Your next question comes from the line of Andrew Tsai with Jefferies.

So as we think about your other catalysts for 2026, just wanted to ask on LITIFILIMAB actually in the filing strategy. Would you guys consider filing for SLE right away if both Phase IIIs were positive later this year? Or would you wait of to wait to file after the older do file 1 or 2 NDAs. And then if just on SLE study hits that big, but the other 1 was trending, would you still file in that SLE?

Thank you, Andrew. We are excited about the potential for LITIFILIMAB. We have 2 Phase III trials in SLE. We expect them to read out this year, we accelerated the second trial and we are really doing well on our CLE trial. We expect that to read out early next year.

Now with regards to the filing strategy, we don't usually comment on it, but I'd like to say that we think that this would be a package as of now, and we'll communicate more as this kind of the studies read out.

Secondly, whether if we saw one positive trial and one negative trial, I think, again, we'd be looking at the totality of data, but there is precedence for that. with the other product in the field. So we don't think that, that, by itself, it would be a showstopper. We remain very encouraged and we are very pleased with the breakthrough designation that LITIFILIMAB got for CLE earlier this year. And we also just presented data from a second Phase II that was positive in CLE. So we continue to be optimistic.

Your next question comes from the line of Geoff Meacham with Citi

Chris, you mentioned you're still looking at BD opportunities even post Apellis. Maybe just help us with how maybe you rank external innovation versus investments and internal R&D and SG&A, obviously, post the appellate you need to make investments to get that -- to get the growth profile going?

Yes. So I think -- thanks, Geoff. We we feel, as we have said in the past, I think we're feeling very good about our late-stage pipeline. -- lupus, I think, could be quite a significant franchise for us because in addition to LITIFILIMAB, we also have a partnership with UCB on dapirolizumab, and we have -- we'll be taking the marketing lead in the U.S. and Japan. On that product. And of course, we have some other assets in early-stage development coming along for lupus.

The whole nephrology franchise, I think, is going to be quite significant for us as well. And then obviously, we have appellate. So as we look at BD, I would say, really that most of what we're going to be focusing on is early stage development and research because that part of the pipeline is quite thin. We have strengthened that with a few collaborations, particularly in immunology with [ Banca and Dara ] for instance, last year and the partnership with Citi and there's some other ones in there.

So we're looking at really building the next generation of growth. I think if we execute well and we can bring everything and the pipeline does come through, this should be a company that can grow well into the 2030s. And what we need to really be thinking about is what comes after that. So that's where, as I say, the early stage research stage pre-IND and perhaps Phase I is where the focus is going to be.

I think on M&A, we would probably be more opportunistic. I don't think there's any particular need at that point to do that. But I guess we'll keep an eye on, but we're not going to be doing the search. So over the last 2, 3 years, I mean, we have had a very systematic search and felt that we wanted to do M&A. I would say with the Apellis transaction and with the pipeline, we don't see the same need to be as proactive on that front.

Your next question comes from the line of Michael Yee with UBS.

Going back to BIIB080. You guys had downsized the study from 700 patients. I think you ultimately had targeted or ultimately about $400 million and why is the cut expenses to get a signal. Can you just remind us, given the context of wanting to be thoughtful about expenses. What type of trend it would make sense for you to push forward, but on the other hand, when you come out with the data, if you don't think there's a really strong trend that you'd be pretty clear about that and would therefore signal to Street that we don't plan to invest there. Maybe just add some color to that, Chris, or Priya, help us understand in terms of the disclosure and how we should be thoughtful about it.

Thanks, Mike. I think just stepping back, yes, we had designed the original CELIA trial with a larger N and I think it was our Phase Ib trial readout that gave us the confidence to redo the power for that study and redesign that trial. And so we feel quite confident that the trial is adequately set up to give us an answer on really testing this very important hypothesis because we already saw the tau reduction in Phase Ib and now we're looking for the transition of tau reduction to clinical efficacy.

Just as a reminder, the primary endpoint of the trial is CDR summer boxes, which, as you know, is a validated end point, but we are looking at a few different doses and 2 treatment paradigms, quarterly as well as 6 monthly. So we'll be, again, looking at the totality of that to see if we can isolate a signal of clinical efficacy. And I think we'll be very disciplined in how we look at that.

The way we've really changed that over several years now is that we think about our go/no-go criteria well ahead of data readouts and this data readout is expected midyear. So you can expect that we'll be looking at that data very carefully, but with really being very disciplined about what the next step is. because that is what this proof of concept is designed for, if and how we get to Phase III.

I think one of the interesting here is that, again, there's just no precedent here, right? And designing the study, I think, it would be fair to say, we basically looked at what we did with amyloid trials, right? We've got the 18-month follow-up. We're looking at a similar population because that's the only thing we know. So we're going to be discovering an awful lot in this study.

Certainly, you want to see the right reduction in tau and tau pet results will be important. And then obviously, can you see some movement on cognition. That would be important to be able to advance. Does that have to be statistically significant? Does that have to be a certain percentage. I think that's where the totality of information is going to be while we feel relatively confident in being able to reduce the tau, nobody knows how long you have to reduce the tau for to get a benefit on cognition.

And -- when you think about the progression of plaque, that is a longer onset and tau is a shorter onset. So we don't really know exactly who the right patient population is going to be. That might be the same as amyloid might be different. And that's why we've said from the outset, this is a pioneering study. And we and the whole medical academic community are going to learn from that.

The bar doesn't necessarily have to be that high. But I think we do have to see some signs that give us -- obviously, hope that this would have a clinical benefit.

Your next question comes from the line of Salveen Richter with Goldman Sachs.

On LEQEMBI, could you update us on the adoption and use of blood-based biomarkers and whether you're seeing patients who completed to some less switch to LEQEMBI maintenance?

Maybe Alisha, you like to take that one?

Sure. Blood-based biomarkers have been growing almost at the same clip as that we've been seeing in the past over 20 which we know they've had really rapid adoption. However, haven't typically been used for confirmation solely. But what we are seeing, there is a PCP pilot that is going on right now, as you know, with Biogen and Eisai, and we do have early indicators that from that pilot, we're seeing a higher usage now of blood-based biomarkers in the PCP than what we do to who do not have that pilot running. So we're showing that once we educate, they are doing it more and more.

Also more importantly, recently, CMS did add that blood-based biomarkers can be used as a confirmation when you go into their database, so when you go and use the drug, you can actually get it reimbursed. I know last year, that was a big question that physicians had and now that has also been put into place. So I believe, moving forward, we are going to see that blood-based biomarkers will be used more and more for confirmation what they are today.

The adoption will be a little bit slow, but awareness is extremely high. So I do think the more that they use it, test and try it, the more they'll be used for confirmation.

When you move towards something the question that you asked about [ Casein ] in this first quarter of the year is when you'll expect to see the tranche of patients that started on Cassina that are now hitting their 18-month mark. And so quarter 1 is when you will see the patients now typically stopping the product. and for us to start getting the feedback. I can say that physicians are asking what do we do? -- some patients.

And if you look at market research, patients in general, who are in either of the products want to stay on product, there is a fear of coming off. and having a decline in their cognition. And we do have several accounts that are looking at how do they switch them to LEQEMBI, as you know, we cannot provide data on that because we don't have data, but we do have physicians that are looking at, can we switch them to maintenance or to subcu maintenance of LEQEMBI.

Your next question comes from the line of David Amsellem with Piper Sandler.

So high-level question on SYFOVRE. If you can talk to it. I know the transaction hasn't closed. But can you comment at a high level on evolving competitive dynamics, particularly with other agents that are in development that are focused in terms of their primary outcome measures on visual acuity as opposed to lesion burden. So help us just understand how are you thinking about where SYFOVRE is going to fit in this evolving landscape.

And ultimately, what kind of data you can point to regarding the product regarding its impact on visual acuity.

Thanks, David. So just stepping back, I mean I think SYFOVRE indicated for geographic atrophy. This is a very highly prevalent irreversible and progressive disease that leads to blindness. I think the median time point is about 6, 6.5 years. And the gold standard for assessing efficacy has been lesion growth.

And I think that is where SYFOVRE has very compelling data, 42% statistically significant reduction in lesion growth. that's kind of at the time of launch. But subsequently, Apellis has also presented 5-year long-term data that shows that you can actually slow down progression by 1.5 years. That's obviously really meaningful in that time frame of 6 years. I totally agree that there is competitive dynamics here. I think with either way, that's on the -- the other product that's on the market, it targets C5, which is upstream of C3, which is the target for SYFOVRE.

And we haven't really seen that long-term data as of now. from [indiscernible]. But moving into what's on the horizon from a competitive landscape, I think we are seeing more targeting of C5 again. That's one. The other is that with Annexon, we haven't seen that the Phase II data were very persuasive. And actually, it did not impact geographic atrophy lesion growth. which we believe is the standard, gold standard.

And Chris mentioned the lesion growth is really important to focus on eventually the best corrected visual equity would be impacted. But at the outset, that's not really the goal because the I adjust to peripheral vision. And that's an important aspect to kind of keep in mind. And when we saw the data from Annexon, this was obviously a very important aspect of our diligence, we saw that actually the BCVA for placebo really went down, and therefore, the drug arm looked good, but I think it remains to be seen. With regards to Regeneron, I know that's competition as well, also target C5 and it's systemic, and it's a combination.

So we believe they're also Syfovre because it's targeted to the eye, it really enables that tissue delivery, which we believe is really important. And Regeneron, the proof of concept still has to come. So we'll wait for that. But we do know that Soliris actually with a very similar mechanism of action failed in Phase II in GA. So I think a lot to watch out for, but we feel really that the IFB data are compelling, and it's going to be a very huge effort for us from an educational, medical, scientific leadership to make the case on why it's important to treat now.

Yes. And I think is from a commercial point of view, the fact that SYFOVRE has 5-year data creates sort of a data moat here. this is a progressive, slowly progressive disease. And people want to have confidence in the safety and how this also develops over time. So I think it's going to take quite a long time for any competitor actually to generate the same level of data that is going to be necessary for the confidence of physicians and patients.

Your next question comes from the line of Paul Matteis with Stifel.

Great. And congrats on a great quarter. A couple of other just quick hits on SYFOVRE if I may. As it relates to just thinking about spending on that franchise over the next few years, how are you at least qualitatively right now thinking about synergies and leveraging existing capabilities with also the reality that GA may still be a pretty promotionally sensitive market that could require things like ETC. And then maybe just any quick thoughts on the prefilled syringe, your level of optimism there and how meaningful that could be?

So Alicia, you have a lot of work in this space.

Yes, I'll take that question. Thank you. first, I can say that we've met several of the leaders over at Apellis, and I want to say that I'm very impressed with that team and with the leadership that they actually have. Many of those individuals have had the ophthalmology background for quite a long time and know the space very well. So I will say they've done a very good job and a tremendous job, especially with the vasculitis cases that came up early on on handling that, and I think they're doing a very nice job today.

When we look at this market and see the opportunities that it has, it is a very large market. It's 1.5 million patients, as you know, only 20% are treated. And there is a really significant unmet need for this patient population. And this launch has sustained growth in injections and in patient growth. And so we believe there is a very large number of patients who are untreated.

There's around 500,000 that currently sit in these targeted physician offices that this team currently calls on for GA. And in our experience, when you have a product that slows progression activating the patients and creating urgency with these HCPs is critically important.

And therefore, we know moving forward, we will need thoughtful education, very strong messaging and an explanation as to why there is a strong value to slowing this progression.

With that being said and knowing that we obviously do not -- we have not closed the deal yet. We know that activating these patients will be critical in this space because when you go in and ask for something, you typically get it. So we do know we will be spending money on DTC and TV ads, as you know, they did run TV ads for 2 quarters, and they did stop those TV ads. I think that would be something that we'd be looking at once we close the deal because educating these patients will be critically important.

We'll also be looking at the messaging for how they're able to handle this in the office. We have no idea up into the space, how much time have they had to spend on vasculitis versus actually being able to compete hand-in-hand in these offices.

And thirdly, I think that they are going to benefit greatly from our patient services and also from this machine that we've had the luxury of building over the last 7 years. If you really take a step back and look at Biogen, especially in North America, we've launched 7 products over the last 7 years in completely different spaces, which means we've created this dynamic engine that has been able to support the launches across all of the TAs that we now have.

Therefore, we believe, going to your question, we will find synergies and a lot of the headquarters capabilities that we will bring to them that maybe they have not been able to invest in. We're also going to look at where they currently spend money that maybe we could reallocate to some of these other areas that we believe will drive the growth.

And we're going to be able to do a great analytics in understanding which tactics they're using now they think are working and which ones we might be able to tweak moving forward. I also have an understanding that they might have a wish list of things they'd like to do, maybe they haven't done so far for the launch. And so we are going to be looking at all of that with them. and believe with Apellis and with Biogen, both of them together will be much stronger than either one of them alone.

And so I know my teams are very excited about welcoming them into North America. And we're looking at giving specialist SYFOVRE a lot of support, so they feel like they have everything they need to succeed in this space.

Your next question comes from the line of Mohit Bansal with Wells Fargo.

Congrats on all the progress. So would love to understand high-dose SPINRAZA helps with switching and persistence as a new offering, do you think it can stabilize the franchise or even grow at this point? Would love to understand how you're thinking about it.

You want to take that from North America, Alisha?

Is the question specifically about SPINRAZA or SPINRAZA high dose?

High dose?

High dose. Okay. Well, first of all, I'll say that I'm sitting in the same boardroom, I was sitting in when we had a patient advocacy group, and I pitched to a couple of executive committee members that we had feedback from patients that they wanted more. And you fast forward to today, we all of a sudden have SPINRAZA HD.

So first and foremost, I will say this is 1 area of the business, which I have never seen in my career. Where this patient community is smart, they are savvy. They know exactly what comes out, when it's coming out, and they will make those requests prior to any approval in the market. So when you look at what has happened, the SPINRAZA HD has been out less than a month. I will tell you that 20% of my patient base have already have start forms in to go and SPINRAZA the high dose.

We also have patients that are switching from competitors and patients that are adding on to Zolgensma. So for the U.S. organization specifically, I do believe that high dose, which we've had a pretty stable business so far. -- with SPINRAZA, and my team has done an excellent job with SPINRAZA 12 mg, but we do believe high dose now has a new opportunity for us, and we are seeing great interest in high dose from not just patients but also physicians.

And so we're off to a great start. Hundreds of start forms have been submitted and I think that this is going to be very positive as we transition from SPINRAZA high dose and hopefully one day Salanersen.

Maybe, Chris, I can cover ex U.S. similarly, we had the approval ex U.S. in Europe, and we're seeing similar traction, particularly in Germany with roughly 20% of the patients converting over to high dose. So off to a really strong launch in Europe as well.

I think when you think about high dose, you think about also the being able to potentially replace the intrathecal injection coming along? And then obviously, Salanersen, I think, Priya, can say we've had our first patient dosed in the Phase III study here. I think this is a franchise that is going to be durable and can grow over time as we introduce these things that make it easier. Now I talk to physicians around the world when I go visit our affiliates. And every time they talk about someone who has switched off SPINRAZA, there's always a tone of regret in their voice.

It generally is because of intrathecal fatigue, but they have the regret because they know that in their view that this is the most efficacious drug. And I think the HD now gives them even more reason to defend the efficacy -- and I think, again, with the Alteon device, we hopefully can eliminate some of the intrathecal fatigue.

And certainly, by the time we get Salanersen, that's expected to be a once-yearly intrathecal and that should also help with the administration. But these are -- it's amazing to hear the emotion of physicians. These are children who are now going to school who would have died years before. And this is just one of those amazing medicines that Biogen has come up with that has had such an impact on health care for, particularly in the pediatric population.

Next question comes from the line of Evan Seigerman with BMO Capital Markets.

Congrats on all the progress. I'd love to drill down a little more on the strength we saw with SKYCLARYS. Can you walk me through some of the drivers of this? I know it's been a lumpy product. But is this traction something we should really start to think through later in the year? And kind of what are some of the drivers there?

Don't you start with the U.S., and then we can talk about X.

Yes. So for SKYCLARYS, which you saw for the quarter is with the $72 million year-over-year, it was a 4% growth quarter-over-quarter, it was down. And it was down because the inventory was built at the end of Q4 last year. And then fast forward to Q1, if you look at the amount of buying weeks, Q1 has 2 fewer buying weeks than the prior quarter.

If you look at patient demand, our patient demand was right on par -- it's just we had a little bit of lumpiness with the inventory.

Now the second thing, though, just to remind everyone is where the U.S. is at launch, is we are now at the launch phase where we are going out, we are using our patient finding our next best action in the field where our reps every week receive a list of all the different offices they can go visit because we believe the patient is there, and then they go on the hunt.

With that being said, now the majority of our patients are coming from doctors who will only ever write on prescription ever for Friedreich's ataxia. These patients tend to be slower progressors and they're much older than what we had predicted when we first launched the product. And so it will take more time as we find them. But the good news is, is that we are finding them and they are going on product, but it does take time from finding the patient when they finally put in their script.

In ex U.S., actually, our revenue in the quarter exceeded the U.S. for the first time from SKYCLARYS as we continue to execute on the launch there. in Europe and starting in Latin America. So we do see from a demand perspective, demand increasing ex U.S. and expect that to continue as we continue the launches. And as I mentioned earlier, it's already available in 35 countries.

In ex U.S., we have a little different strategy. So we've -- as Alisha said, it's really finding the patients. So as we found the patients, we have put them on drug and they're on early access programs while we negotiate reimbursement.

So as we get reimbursement, you'll start to see the revenue suddenly flow through. But it might be lumpy because we can switch potentially several hundred patients, all at once from being a 0 revenue patient to a full revenue patient.

We have -- right now, we have not only rent more revenue, but we've had now for some time, more patients outside the U.S. on drugs and insight. Just as I say, they haven't been fully reimbursed. And that's progressive. And we're now seeing really the rollout and potential reimbursement in Latin America, for example.

Your next question comes from the line of Alexandria Hammond with Wolfe Research.

Another on BIIB080, what's the potential in other telophase. And as a follow-up, what will be the most important biomarker from the upcoming Phase II results in terms of informing next steps beyond Alzheimer's?

Yes. Thank you. This is an area that we are discussing quite deeply. We know the high unmet need in primary tauopathies. And what we've seen in terms of our reduction with BBA at least in our Phase Ib trial was very encouraging. I think we would be looking for tau reduction and we would be looking for other details, I mean, regions of the brain and such, and that would inform our strategy on whether we would continue to think about doing more work in primary tauopathies. But yes, it remains high on our list of evaluations and potential possibilities.

Your next question comes from the line of Terence Flynn with Morgan Stanley.

Just one on FELS for me and AMR. Obviously, you called out the acquisition of the China rights for $100 million and then some pretty significant back-end loaded milestones. So just thinking through what this means for the broader commercial opportunity maybe both, not just in China but also in -- on the global basis and how you're thinking about that relative to consensus.

Yes. Again, I think as you look at kidney disease, a lot of this there have not been treatments for it. And there's a whole alphabet soup of these things, right? You've got IC-MPGN, you've got AMR, you've got PMN. You got C3G and I think it takes -- it's hard to actually even to come up with sometimes the epidemiology. I can tell you on the MPGN for Empaveli, it's actually not very clear exactly what the what the actual underlying epidemiology is.

So it's hard for, I think, investors to really assess some of these. What we do know, for instance, on the MR is we just take that there are about probably 11,000 patients. And if you actually look at the price of IgAN, it certainly if you look at it with the latest Otsuka price in IgAN of about $350,000 a year, you're looking at a total addressable market north of $2 billion, somewhere between $2 billion and $3 billion, in fact, right? And there hasn't been any treatment there in the past.

And certainly, the Phase II data, although small numbers, showed a remarkable 80% resolution of AMR. And then you've got MDI, which is sort of a cousin of AMR. SP530023306 That adds another 5,000 or 6,000 patients, and we've just initiated a trial in MVI. IgAN is obviously going to be a significant market, particularly in Asia. And I think there's 2 things where we see competitiveness.

When you start looking at any autoimmune disease and pre can speak more to this, but you really want to think about where are you in the whole immune cascade. In most cases, if you're treating an autoimmune disease, you're trying to suppress the immune system. They don't really want to do that any more than you have to. And so having something that is close to the actual disease cause, I think, is going to be relevant.

And that's where we think CD38 is a huge advantage of really acting on the plasma cells and the NK cells. But the other is really the durability of treatment. And IgAN, we showed in a Phase II that after 9 infusions that we still had durability of treatment after 18 months. And that that says that maybe we're doing something here that looks more disease-modifying than other agents. But Priya, you should probably weigh in here you since you're much more expert than I am on this.

I think you covered it well Chris. We're really excited about the first readout of felzartamab. We expect this in 2027. And really, it's stepping back is -- it's targeting the CD38 positive plasma cells. -- which we believe are a key source of the pathogenic autoantibodies. And the readout is really a biopsy readout, which is also very objective. So we're excited about this.

Great. I think we've got time for 1 last question. Maybe that's the last one, please.

Your next question comes from the line of Jay Olson with Oppenheimer.

Congrats on the quarter. Can you talk about the real-world treatment persistence of LEQEMBI that was presented at ADPD with regards to -- how do you expect the subcu version to further impact treatment persistence?

Thanks, Jay. So overall, there's a question -- there has been a question lingering out there, whether after reduction on clearance of blocks, you continue to keep patients on an anti-amyloid therapy, specifically 1 like LEQEMBI, which has a dual target of the soluble toxic species as well as block reduction. We've shown extensive data in prior meetings on the benefits of keeping patients on therapy. This again is a progressive disease.

Once neurons die, you cannot recover them. And we've shown that fluid biomarkers actually come back within less than 6 months. And then although the plant comes back much slower. So that's one piece. I think the real-world evidence data is compelling because it shows that patients and neurologists actually want to continue to stay on therapy.

That, I think, is the powerful reflection of that data. And this continues to be really, really important for us. Now we are waiting -- we already have subcutaneous maintenance, which again makes it simpler and offers patients optionality on staying on therapy. But with subcutaneous initiation where we'll get an outcome from the FDA next month, we continue to remain very optimistic about how this could inflect in terms of the patient journey.

And then finally, I'll just add a point about our presymptomatic trial of HEAD345, which is still to read out in 2028. And we'll see about that readout. We think it's going to be an important landmark trial in the field. But what becomes important with subcutaneous of getting accepted is that there could be an interchangeability, which could be very relevant in the presymptomatic population.

So again, we believe that this is going to be a very important inflection point.

Thanks, Priya. Thanks, everybody, for joining the call today. We've got more questions to reach out to me or [indiscernible]. Thank you.

This concludes today's call. Thank you for your participation. You may now disconnect.

Good morning. My name is Kolby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen business update call to discuss the proposed acquisition of Apellis. [Operator Instructions] Today's conference is being recorded.

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, Kolby. Good morning, everyone, and thanks for joining us this morning.

I'd like to point out that we'll be making forward-looking statements, which are based on our expectations. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional details. And this communication is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell any common shares of Apellis.

Joining me on today's call are Chris Viehbacher, our President and Chief Executive Officer; Adam Keeney, Head of Corporate Development; and Robin Kramer, Chief Financial Officer. Chris, Adam and Robin will each offer some opening comments, and then we'll move to a Q&A session where we'll also be joined by Alisha Alaimo, President and Head of North America; and Priya Singhal, Head of Development. You can access the press release and supporting materials for today's announcement as well as a replay of this call at biogen.com.

And I'll now hand it over to Chris.

Thank you, Tim. Good morning, everybody. Over the past year, I often get the question on M&A, what is Biogen really -- what would Biogen consider? And I always put that into the context of where the company is right now. We're feeling great about our late-stage development pipeline. There are a lot of assets that we think are high conviction assets. But as you look at it, that probably doesn't -- that pipeline doesn't really start to contribute to growth until 2028. And as always, these launches take time to build up to peak sales.

So as we thought about potential acquisitions, we said, well, one is we don't want to take a lot of Phase III risk because we've got actually a nice pipeline. But if we could find an asset that was post Phase III, either just about to launch or early in its launch such that there's still plenty of growth opportunity that, that would be something that would be interesting that could drive our near-term as well as our long-term growth.

The second is we have opened the strategic aperture of the company over the last 3 years from being a pure neuroscience company to one that is in neurology, immunology and rare diseases. And that is already increasing the scope of the physician community that we need to cover. We are having to acquire new capabilities. And we didn't really want to stray outside of that. So if there was an acquisition, it really had to make sense from the strategic narrative of the company.

The other is that we didn't feel any need to stretch our balance sheet. And so for us, we were very comfortable if this was going to be somewhere up to about $5 billion to $6 billion.

And then obviously, the fourth criteria and the most important is that you had to be able to acquire it at a price that still creates value for Biogen shareholders. And we think that Apellis actually meets all of those criteria.

This is really an immunology play. We're talking about complement inhibitors. The complement system, as you know, one of the first lines of defense in the immune system. And pegcetacoplan is really a C3 complement inhibitor. First indication was with EMPAVELI in a rare disease called PHN (sic) [ PNH ] kidney disease. That was followed then by an ophthalmology indication with SYFOVRE in geographic atrophy. And then most recently, last year, EMPAVELI received also the indication of C3G and also the MPGN.

And so we're looking at products that are early in their launch cycle. And that the value of any company, as you all know, is really a function of the revenue forecast. And products that are approved and on the market, obviously, there's always variability in revenue forecast. But I think certainly, I feel a whole lot more confident in forecasting a product when it's already on the market and we have market data.

So this expands our commercial growth portfolio, as we said. And I think the second point here is the path into nephrology. This is a new area for Biogen. We believe with felzartamab, we've got an extremely valuable program in our pipeline, but we're busy trying to acquire capability in medical affairs, in commercial. And actually, the acquisition of Apellis really accelerates that. There is a very strong team commercially, medically in Apellis. If you're going to go to a medical conference, now we're a company that actually has a commercial product. We're getting to know all of the physicians. There's quite a significant overlap between the physicians prescribing EMPAVELI and IgAN. There's about a 50% overlap of physicians who will be prescribing AMR.

So we just think that if the clinical trials work out for felzartamab as we hope, that we will have a running start into the launch, and we could actually potentially achieve peak sales faster than we would if we were just doing on this on our own.

SYFOVRE is out there in the marketplace. I think we see that as a continued growth story. I think this is one where we clearly see that this is the better product in that category. But I think we're not necessarily seeing a revenue forecast that differs significantly from the consensus forecast. In fact, we're probably a little on the conservative side on that product.

So what this does net-net is, we add meaningfully to our top line and our bottom line, and we really do expect a meaningful increase in our non-GAAP EPS CAGR through to 2030. And it doesn't stretch our balance sheet, and Robin is here and she'll say more, but we believe that we can delever by the end of '27, by the end of next year, and that still preserves some strategic flexibility.

That said, I think having done this acquisition and with our pipeline, I think we will be focusing principally on now on early-stage assets. And any M&A would be purely opportunistic, but we're probably not really looking to go out and do anything in specific terms on the M&A front going forward.

So with that, I'm going to turn it over to Adam Keeney. You may not have met Adam before. Adam is our Head of Corporate Development. He and his team are the ones that really did the heavy lifting on this. Adam is a research scientist by training, worked in business development, corporate development at Sanofi and at J&J, was CEO of NodThera for many years and has been a terrific addition to our team about 3 years ago.

So I'll turn it over to you, Adam.

Well, thank you very much, Chris, and good morning, everyone. So earlier this year, we showed this slide that describes our strategy for delivering a new Biogen, with the potential and the opportunity for long-term sustainable growth. This strategy anticipates 3 sequential sets of growth drivers, including our growth portfolio of currently marketed products. With confidence in our portfolio and pipeline continuing to increase, the acquisition of Apellis has the opportunity to further strengthen our business by adding two best-in-class products to enhance this growth portfolio. We believe these are differentiated medicines that address significant unmet need in immune-mediated retinal disease, in rare hematology and in kidney diseases.

Let me take a moment now just to walk us through each of these products.

Starting with SYFOVRE, which is the first FDA-approved therapy for geographic atrophy. Geographic atrophy is a serious immune-mediated retinopathy, which, if left untreated, can lead to irreversible progressive vision loss that meaningfully impairs the patient's quality of life. So we are taking a realistic view on the potential of the future growth of SYFOVRE. What is clear is that the GA market is large, underpenetrated with an estimated 1.5 million patients diagnosed in the U.S. with very few currently being treated. We know that the market is competitive, but we're also optimistic that the best-in-class profile of SYFOVRE, coupled with Biogen's demonstrated U.S. capabilities and Apellis' sales and marketing team, we can enable the product to realize its full potential. In addition, we are encouraged by the opportunity to launch a prefilled syringe to further support SYFOVRE's launch and differentiated profile.

Now turning to EMPAVELI. EMPAVELI was approved in PNH, a rare hematology indication for some time. And as you know, it's commercialized by Sobi ex U.S. More recently, EMPAVELI was approved in 2 rare immune-mediated kidney diseases, C3G and IC-MPGN. These are rare diseases with very significant disease burden. 50% of patients reach end-stage kidney disease within 10 years, resulting in a number of patients requiring kidney transplantation. We see EMPAVELI as a differentiated medicine with significant revenue growth potential ahead.

EMPAVELI is the only FDA-approved therapy for both adults and pediatric patients in primary IC-MPGN as well as pediatric C3G and post-transplant C3G recurrence. In its registrational studies, EMPAVELI demonstrated clinically meaningful benefits across all 3 key markers of disease, reduction in proteinuria, stabilization of kidney function and clearance of C3 deposits.

Commercially, the launch is in its early days, which creates a meaningful revenue growth opportunity as awareness, diagnosis and treatment adoption continue to expand. We believe we have a real opportunity to leverage Biogen's established commercial capabilities combined with those of Apellis to drive long-term value for EMPAVELI and support the patients suffering from these difficult diseases.

Furthermore, Apellis provides an established nephrology sales and marketing capability and infrastructure that we can leverage as a foundation for felzartamab's launch in kidney disease.

As you can see on this slide, EMPAVELI provides a foundation for our growing nephrology franchise. With the nephrology expertise, infrastructure and capabilities that Apellis have built, we have the opportunity to establish a foundation for our own growing kidney franchise today. Having EMPAVELI already approved in rare kidney diseases provides a commercial presence in nephrology and transplant centers that have an overlap with felzartamab, enabling us to begin building deep relationships with nephrologists and the patient community.

With this deal, we're looking to accelerate our expansion into nephrology and establish an anchor for a broader durable platform to fully realize the opportunity with felzartamab to drive significant long-term growth.

I'd now like to pass the call over to Robin, who will provide a financial overview of the proposed transaction.

Thank you, Adam. I'll now take you through some of the financial highlights of the transaction. Biogen's acquisition of Apellis for a price of $41 per share represents an upfront consideration of approximately $5.6 billion in cash and contingent value rights payable per share in two separate payments upon achievement of certain thresholds related to the global sales of SYFOVRE. We expect to finance the acquisition with a combination of cash on hand, revolver borrowings and a bank term loan. We estimate the impact of the financing costs and foregone interest income to be approximately $120 million to $130 million, both in 2026 and 2027. We expect to repay the borrowings associated with the transaction by the end of 2027.

The transaction is subject to customary closing conditions, and we anticipate closing the acquisition in the second quarter of 2026. As Chris and Adam shared, we believe the Apellis transaction enhances our growth portfolio in immunology and rare disease and accelerates our expansion into nephrology, consistent with our new Biogen sustainable growth and capital allocation strategies. We're gaining 2 best-in-class commercialized medicines that enhance our growth portfolio. We believe SYFOVRE and EMPAVELI will contribute meaningfully to our top line growth in the near and long term. We see real opportunity to create sustainable value with this deal, benefiting from the combined commercial capabilities of Biogen and Apellis. We expect the revenue from the two products together can grow in the mid- to high teens for at least the next 2 years.

Our near-term revenue estimates for both products combined are consistent with analyst consensus. We have high expectations for EMPAVELI, which we believe has significant growth potential, benefiting from the combined capabilities of Biogen and Apellis. For SYFOVRE, we are optimistic that we can realize its full potential over time with the opportunity to launch a prefilled syringe to further support SYFOVRE's launch and differentiated profile.

Additionally, we remain enthusiastic about the opportunity for felzartamab in kidney disease and one of the compelling aspects of the proposed acquisition is the potential to advance our expansion into nephrology by adding a U.S. nephrology infrastructure that can be deployed for the commercialization of felzartamab.

As you know, we've demonstrated strong cost discipline, and we'll have the opportunity to continue to be disciplined on operating expenses following the close of this transaction. We believe this transaction represents a capital allocation opportunity that further bolsters both our top line and bottom line growth prospects and therapeutic areas aligned to our stated immunology and rare disease strategy.

Finally, from a financial perspective, we believe this transaction will strengthen our near- and long-term growth potential as we add two growing commercial assets. We expect it to become increasingly accretive starting in 2027, and we believe this transaction meaningfully increases our non-GAAP diluted EPS CAGR through the end of this decade. Our expected combined strong cash flow generation provides us with the opportunity to pay down the debt used to finance the transaction by the end of 2027, preserving our strategic flexibility. Finally, we plan to update our full year 2026 financial guidance when we report earnings for the first quarter.

I'll now pass the call over to Chris.

So again, this is a strong strategic fit now. But I would tell you that we have spent quite a lot of time with this project. We started looking at this company well over a year ago, did a lot of market research. Initially, we concluded that actually market forecasts and the company's own projections were probably running ahead of what the reality was coming back to us in terms of market research. So we didn't actually engage with the company until actually those forecasts became more in line with our own forecast. In the meantime, we've also done an awful lot of market research on -- particularly on the kidney. We know that the -- as Adam said, that the epidemiology of MPGN is a little less clear. But Alisha and her team have done a huge amount of market research. And I think as we look at the near term, I think we certainly understand the market opportunity and what is going to be available.

So as we consider with this, this is a very compelling value creation opportunity. I think we feel comfortable with our revenue forecast. We feel comfortable that we're going to be able to work with the Apellis team to really bring the teams together and do even more with these two products than either company could do on their end. And again, as Robin said, we haven't really stretched our balance sheet overly here, and we have strategic flexibility. So we believe, as I said, if I look at those 4 criteria I started with, that Apellis really looks at it. We've looked at a whole range of companies. You can pretty much assume that anything under $5 billion of market cap, we have looked at, and we believe that this was the best opportunity that really fits strategically with Biogen and where our pipeline is taking us.

So with that, I'll turn it over for questions to Tim.

Thanks, Chris. Kolby, can we go to the first question, please?

[Operator Instructions] Our first question comes from Phil Nadeau of TD Cowen.

Congrats on the deal. I guess one of the more controversial aspects of Apellis in the public market is the competitive position of both SYFOVRE and EMPAVELI. What are your thoughts on the competition in the GA and kidney spaces?

So on GA, and I'll ask Alisha also to comment. But I think on the current competition, we clearly see an advantage for SYFOVRE. At the same time, this is a very competitive space, and Apellis is investing significantly. This is a complex disease, geographic atrophy. There isn't a clear measure for visual acuity. And so patients are really having to take an injection in the eye every 2 months. And they don't necessarily see any immediate benefit. And so we do see an opportunity for increased patient engagement. There's certainly going to be other products coming along in development for geographic atrophy. I think there's an opportunity to grow this market faster. Less than 10% of eligible patients are actually being treated today. So there's plenty of market opportunity even with competitors coming along.

And again, without any real clear marker of efficacy, I think everybody else is going to have the same challenges with this marketplace. But I do think Alisha and her team have built an extremely effective organization, particularly for patient services and geographic atrophy is not a rare disease, but I do believe, at least in the initial phases of integration that this rare disease approach could actually be helpful.

And on EMPAVELI, there is a competitor from Novartis, but the efficacy benefit is significantly greater on EMPAVELI. And again, Alisha and her team have done an incredible amount of work to really understand center by center, where the patients are. And I think, Alisha, you're feeling pretty confident in what we're thinking about for our forecast for the next 3 years. Alisha, do you want to add anything here?

Sure. Thank you, Chris. So I think really, today, as I sit here in the seat, we have had a little bit luxury of time as we've looked at this deal. Biogen is very well positioned to partner with the talent in Apellis, which Apellis has done a very good job across both of these launches. And we think that this is a really good time for us to work together to really drive both of them even further than what you see today.

So we will learn from them really what they've tried, maybe some things that they wanted to go further on, they weren't able to do and apply both of our strengths moving forward for both of these launches to even get to a better outcome than maybe what they have today, especially because it is going to be highly competitive for both of these areas.

So when it looks -- when we start with SYFOVRE, this is a launch that we've had our eye on for quite some time. We've been following it very closely. As all of you know, it is a very large market, around 1.5 million patients and only 10% get treated today. But this launch has had sustained growth in both the injections and in patients. And so we do look forward to meeting with the team to understand a lot of their challenges. And based on the research that we've done and some of the diligence that we've done to date, we do think that there are 3 areas for this launch where we can become quite competitive.

I think first and foremost, they have the launch strategy for the prefilled syringe. We very much look forward to meeting with the team, understanding what that strategy is and how we will enter the market. Our understanding in this space is that HCPs do have a very strong preference for prefilled syringes. So this will give SYFOVRE really a competitive edge in the market.

The second that Chris alluded to is really around how they are activating and educating patients in this space. So in our experience, as you know, with several of our products, when you have a therapy that slows progression, having the surround sound approach to patients is incredibly important. And I think over the last 7 years, we've had 7 launches. In fact, just last Friday, you saw SPINRAZA HD, is also launching. So we've built really great capabilities in both the specialty area, but also the rare disease area on how you activate the patients and really educate them on why they need to stay on treatment longer.

The third area where we think we can also see improvement, and this is also going to do with the HCP community and understanding through Apellis, what work they've done with them. But you do see for both products in this space, one of the issues that they have is a drop-off rate on keeping patients on product. And I think that we've done a lot of great work with our other therapeutic areas and how you start and stay on treatment. We'll be working with Apellis very closely on looking at what can we do with SYFOVRE in the space with HCPs and education. I also think from some of the power that we have on our medical side and then the expertise that they have in nephrology and in GA, we are going to be able to make both launches really continue to have a long runway.

We'll take our next question from Geoff Meacham of Citibank.

This is Nishant on for Geoff. Going back to the SYFOVRE opportunity, I know you mentioned around like 1.5 million people in the U.S. there's a market opportunity there. What do you see as the biggest gating factors to accelerating penetration from here? Is it the diagnosis, the retinal capacity or physician comfort around benefit and risk.

Biggest barriers around SYFOVRE.

Biggest barriers around SYFOVRE. I think there's a couple. I think, one, the physicians have done a very good job on how they treat the patients. So they're at least getting them diagnosed when they come in. I think there's two areas here. One is, are they activating to come in and ask for the product. I don't know the answer to that. However, what I would think because there isn't a major DTC push, there's a little bit from the competitor. But for SYFOVRE, I think activating these patients is actually quite difficult because they're sort of living with this disease and they're sort of working around it. And sometimes when they go in, it could be a little too late. So how do we start that education earlier?

The second challenges are, and I think all of you see it probably in the revenue number is how we really make sure we balance and manage contracting that happens in this space. We do have a lot of experience in that. We look forward to meeting with Apellis and understanding their strategy and looking at what are some of the things that we can do to also help. And also on the Medicare side, we have a lot of experience in Medicare and Copay. And so also looking at their free patient programs, looking at things like bridging programs and understanding what we can do to also help patients have affordability when it comes to the medicine.

And then thirdly, the one that I mentioned last, which I think is one that might not have been talked about and that we have found in research, and again, I look forward to learning from the team is 50% of patients do drop off for both products in this space. And that can create quite a leaky bucket. So even if you're activating all these patients and 50% really drop off because they don't see an improvement even though the drug is slowing progression. We have now seen that in other therapeutic areas. And I think doing a lot of education around what that means in real world and producing some real-world evidence around it and making sure I did see they have data out now that does show the improvement for the 1.5 years in evidence that they just published. I think just making sure people know that information as well will be important.

But I do think when I look at both products, even in research, I can say vasculitis was an issue in the very beginning. We do believe that is now very rare. We also believe that when you look at market research with physicians, they're either neutral to positive. So Apellis has done an excellent job turning that around in the field. And so now it really comes down to who can go into those accounts and when and who can activate the patients. And so I'm sure Apellis already has a lot of great plans in place, and it's how do we partner with them to even give them more support than what they have today.

We'll take our next question from Salveen Richter of Goldman Sachs.

Just a follow-up on SYFOVRE here. When you look at the competitive dynamics from drugs that are currently in development, and we have some data coming up from Annexon as well as Regeneron. How do you think about risk of differentiation here when you were doing your competitive diligence?

Yes. This is Adam. I can take that question. So obviously, when we do any acquisition, we look at the competitive landscape. We look at data on all the potential opportunities out there. I think when you look at the two companies that you mentioned, they are early in development. They have still to read out their late-stage programs. There's a mixed data set in terms of the Phase II proof of concept, mixed endpoints and mixed modalities and mechanisms. So I think we'll await for those readouts. Obviously, as we think ahead, we have accounted for competitive entry into the SYFOVRE forecast. So I think we're comfortable with our assumptions.

We'll take our next question from Terence Flynn of Morgan Stanley.

I guess, Chris, just bigger picture, anything you've learned as an organization from the Reata transaction that you can apply here to this deal? And then can you give us any details about the actual size like in terms of headcount of the commercial team that you're adding both in nephrology and on the GA side?

Yes. I think, look, on Reata, we are clearly in a much stronger position having done that transaction than had we not done it. I would say if there was something that we didn't anticipate was we got the epidemiology right. I think the patient population that is there is actually a little older than what we expected. And it comes back to something that Alisha was talking about that when you're talking about a slowly progressive disease, the adult population is probably not as severe as the younger population. And therefore, the willingness to treat is not quite the same. So we actually do believe we're going to drive the value out of Reata.

I would say, as we looked at particularly SYFOVRE, we saw a lot of parallel with that. I think Alisha gave a terrific answer on that, that you're talking about a disease that's slowly progressing, you're again into essentially -- if I had to pick the best ones to market are always treat to cure. Here, we're treating to hopefully prevent a worse outcome, including blindness. And so you have to convince the patient that continuing treatment is going to be better longer term, but they may not see an immediate benefit. And so we spent quite a lot of time just making sure that we understood that dynamic on SYFOVRE.

And I think I would say, I think we all have to be realistic about how that is going to grow. I think there's a huge market, as Alisha said, but it's going to take quite a lot of effort to unlock that potential. There are some near-term catalysts on that. But I think where we see the real underappreciated value of Apellis is really EMPAVELI. I do think we feel a lot of more confidence in the growth of the kidney franchise and what's exciting to us is really we see a lot of experience and capability in Apellis that we don't have. And I think combining the two organizations will certainly make Biogen stronger and I think give us a whole lot more confidence in our ability to launch felzartamab with success.

We'll take our next question from Emily Field of Barclays.

I'll ask two. I guess the first one is, in the prepared remarks, you said that your forecast for the franchises are in line with consensus for the two products. But kind of putting together all of the commentary, it sounds like you might be above the street on EMPAVELI and below on SYFOVRE. So I was just wondering if maybe you could provide any color or context around that.

And then just on the accretion expected by 2027, I'm just trying to get a sense of kind of where this is coming from? Is this from rationalization of the R&D cost base at Apellis? Are you placing any value on anything in the pipeline there? Or is some of the synergy estimates coming from expected lower G&A investment on the Biogen side ahead of the felzartamab launch?

Well, just to start, I do think this is -- again, this is largely a U.S. opportunity and Alisha and her team have done a lot of work. But I would think you're right, we're probably slightly conservative compared to market forecasts on SYFOVRE. Although again, as Alisha said, I think we do see opportunities. It will -- I don't think we see a big inflection anytime soon, but we do believe in the long-term growth potential of this. So this is one where we'll have to invest with patients and thoughtfully, I think you have to really start with this patient by patient as opposed to looking at the 1.5 million and just assuming this is going to all come together. We are very encouraged by the kidney opportunity.

I'll turn it over -- just I didn't answer fully the last question. The commercial team at Apellis is about 350 people, and we haven't actually gone through a whole person-by-person analysis. But I think we are looking to try to retain as much talent as possible in that organization.

But I'll turn it over to Robin for the accretion story.

Yes. So your perspective on the revenue and the product mix is spot on with what we're thinking about. And then on a combined basis, that would be the mid- to high teens growth. And we do see an opportunity really beginning in 2027 to have this transaction be accretive in a meaningful way on a go-forward basis.

We'll take our next question from Paul Matteis of Stifel.

Great. When you guys did your diligence, what did you identify as the biggest risk to this deal long term? And what got you comfortable with that risk?

Yes, I think we've hit on a couple of themes. I think that we're very comfortable with the near-term number forecast that we have for the deal model, both for SYFOVRE and EMPAVELI. I would say in the long term, like every rare disease, there is a variance, a variability, a range of potential epidemiology here. I think we're very comfortable with the C3G epidemiology. We also know where those patients are, how they're activated, how they're treated, the overlap with felzartamab. There is probably more of a range on the IC-MPGN epidemiology. And so that does lead to a little bit more uncertainty at the very long back half of the forecast. But I think that we can really start to learn from the initial launch and how to activate those patients as we go.

On SYFOVRE, as we've mentioned, I think this is not a near-term inflection. But over the long term, we do see a large number of patients available and the variability in the forecast is how many of those patients can get activated and how many can stay on drug. So I think those are some of the drivers of the long-term forecasts.

We'll take our next question from Michael Yee of UBS.

Putting in the perspective, the premium and the valuation that was paid, can you talk a little bit about process and the competitive nature of the process and/or how you got comfortable with the premiums given a number of comps this year and just kind of talk through that a bit.

Yes. As you can imagine, Mike, we spent quite a lot of time on that. I think I can't really speak to the competitive nature. We'll have to wait for the disclosures. So I can't say anything about that.

What we can say is, I think two things. First of all, obviously, the premium looks high compared to the spot price. But we don't really think the spot price is the relevant measure for looking at valuation. As you know, again, and as I said before, the valuation really comes down to revenue forecast. And we have been working on this for over a year. And pretty much as we follow this, I think there's been a pretty strong continuity on what we think is the intrinsic value of the company, and we certainly feel comfortable about where we've ended up with the sale price.

There's also -- there has been a lot of macro pressure, as I said earlier, also on the short term and a lot of biotech companies. And so when you look at this on a 90-day VWAP basis, that's an 86% premium. That's still a good healthy premium. No question about it. It's about a 32% premium roughly?

35%.

35% premium to the 52-week high. But I think when you start looking again at the multiple of the price to revenue, revenue at peak revenue, the revenue at 3 years and 5 years, Obviously, the bankers have all of the comparables. We actually think that all of this is pretty comparable to other similar type transactions. What is most important is that at least in terms of our own forecast and for all that we know today, we do believe that we still have plenty of room to create shareholder value for Biogen.

We'll take our next question from Brian Abrahams of RBC Capital Markets.

This is Kevin on for Brian. Maybe can you talk a little bit about potentially other indications that you could maybe take EMPAVELI into? Apellis has initiated a few other studies. And then maybe in the context of also having an oral early-stage C5 antagonist, just how are you sort of positioning or how are you thinking about your positioning in the complement landscape going forward?

Priya, you could take that one.

Yes. Thanks for that question. We're looking at this very carefully. I mean I think Apellis has done a really nice job with both EMPAVELI and SYFOVRE. And we are very interested, as you know, in immunology. And that's actually a premise for how we approached this. So I think it's exactly right. We're looking at the mechanism of action. We're looking at the trials that they've already started. We're also looking at some of their early-stage products like the siRNA, and we're thinking very carefully through what would be the next best indications. But we're early in that evaluation. So we're continuing to look at this very carefully and remains a very important point that we will kind of continue to look at in the next several weeks and months.

We'll take our next question from Jay Olson of Oppenheimer.

Congrats on the deal. We definitely appreciate the value creation opportunity, especially with the synergies in your nephrology and immunology franchises. We're curious about what this deal implies for your strategic plans in neuroscience and the level of commitment to continue investing in neuroscience, especially with the timing of this deal in proximity to BIIB080 data and if there's anything to read across from that?

There's definitely nothing to read across on that. I think this has been a thoughtful strategic process now over the last 3 years. As you know, the company was pretty narrowly focused in neuroscience. And I think I was certainly pretty clear coming in that we remain committed to neuroscience, but that's a very hard area for a company to survive long term in if that's your only area of therapeutic focus. A lot of the neurological conditions don't have a strong scientific underpinning in terms of understanding causes of disease. Studies in this area are extremely long and extremely expensive. And so we sought to open the strategic aperture. And basically, immunology was a logical place for us to go because as I have always argued, MS is certainly a neuroscience, but it is also an autoimmune disease. And so we felt that we had enough immunology expertise to branch out into that. And really with the experience of launching SPINRAZA that we could get into rare diseases.

So today, I would say our focus is in neurology, immunology and rare diseases. Our commitment to Alzheimer's is extremely strong. And certainly, if we have a successful readout on BIIB080, that's going to be quite a significant investment for the company to bring that to market. We continue to invest significantly alongside our partner, Eisai, even today on, for instance, the AHEAD 3-45 study, really a seminal landmark study on the early treatment of presymptomatic patients. Our commitment to ALS is still very strong. I think Biogen is very proud of the fact that the whole neurofilament aspect of the biomarker really facilitates and accelerates the research into the dreaded disease of ALS.

And of course, we also have a strong investment alongside our partner, Denali in Parkinson's disease with the LRRK2 study, which will also read out. So I don't think anyone can say that we are abandoning that. It is one that is a very expensive, a very risky area, but I think it also corresponds to a lot of the capabilities of Biogen. But I think for the longer-term sustainable growth, we felt that we needed a broader platform. And as I say, immunology and rare makes sense. And to that end, I think the acquisition of Apellis fits exactly in with that strategy.

We'll take our next question from Chris Schott with JPMorgan.

Just a two-parter on EMPAVELI. Just to frame this out, can you just talk a little bit about where we are now in terms of penetration and where you think that can go over time as you think about the longer opportunity for the drug? And then maybe relative to felzartamab, how much infrastructure does Apellis provide relative to what you think you ultimately need? I'm just trying to get my hands around how far along does it get in terms of that kidney build-out.

Alisha, do you want to take that one?

I'll go ahead and take that one. So far for EMPAVELI, clearly, there's a significant patient need, and we are still early days into this launch. And based on what we've seen so far, the patient start form demand has been quite encouraging. We are excited about what Apellis has also achieved, and we look forward to having new colleagues join us in order to partner with them on the significant launch and also to look at how we start really building for felzartamab in parallel.

We're seeing early indicators that HCPs are prescribing EMPAVELI across several different patient types, including pediatric, adult, native kidney and post-transplant. So that's also quite a very significant early signal. And we also could see adoption of C3G happen somewhat a little bit more quickly than IC-MPGN, given that the primary IC-MPGN is somewhat hard to diagnose and less well recognized today.

And so in their penetration, I will say that when I look at this launch, as a rare disease launch versus my other rare disease launches, typically, you expect a big bolus in the beginning. And because this has very focused HCPs, we're seeing this be a nice linear growth. So it's not that you have one big bolus and then all of a sudden it goes away. We believe from the work that we've done prior to doing diligence and also through diligence that this product still has quite a long runway when you look at where they are today versus where they need to be. So it's early days. Not every focused physician has prescribed the product. There are 7,000 nephrologists, and we are seeing really a quite nice linear growth with start forms in the patient segments.

Now of course, early in launch, you do see where sort of you can call it low-hanging fruit, like the pediatrics, of course, they're going to have much more severe disease, and there'll be much more urgency to treat and also on the severe end. So the sort of bandwidth that you see is they went for peds and severe. We believe there's also quite a lot of moderate as well as we move through this launch. So again, I would say from what we know today, and we still have not met with the team that we would expect a linear growth.

And in terms of the capability and felzartamab launch?

Yes. So this is also very interesting. So first and foremost, hiring in nephrology is actually not so easy. It's a competitive space. And here we are with this acquisition of EMPAVELI, and we are hiring in individuals that have quite a bit of experience in nephrology. So a majority of EMPAVELI field team, both medical and sales were hired for the rare kidney launches, even though I know they start in PNH, and they have really good experience in that specialty.

Now when you look across how we sort of work this with felzartamab, the call points across C3G and IC-MPGN are not going to be identical for AMR. However, there is significant overlap as Chris and I believe Adam already alluded to. Since both C3G and primary IC-MPGN of recur post-transplant, EMPAVELI's customer audience includes both post-transplant nephrologists and general nephrologists. So as you know, AMR patients are treated in both of those settings, depending on how long it's been since their transplant. It also allows us to engage with this product in a broad range of physicians prior to launching felzartamab, much more meaningfully than what we would if we were just building for the launch today.

Now additionally, I know we talk a lot about AMR. But even with this team and what we know to be true about the capabilities that they have, we believe that every physician target for rare kidney will also be a key target for us when we get to the IgAN launch. And as you know, IgAN is going to be very competitive. So now that we will already build those relationships years in advance, we also see a great synergy for IgAN.

We'll take our next question from Evan Seigerman of BMO Capital Markets.

Congrats on the deal. Can you just remind us of the IP or exclusivity for both of the assets? And then I want to touch on the CVR structure. Can you walk us through how those sales levels were chosen for the CVR on payment? And really what needs to happen commercially to achieve those by the prescribed time frames?

Yes. So obviously, as part of our due diligence, we did very extensive look at the IP internally with external counsel. So I think we're very comfortable with the IP projections in the model. In terms of the CVR, so I would say that these are probably more aspirational sales tiers. I think it is reflective that we do see some outcomes that get us to very significant overall sales over time, as Chris alluded to. I think we can also say that in our base case model, we're not assuming we're going to get to these sales tiers. So this would be an opportunity above and beyond what we've currently forecast.

And obviously, if we were to pay $2 -- plus an additional $2 at these sales tiers, that's very significant additional value that will accumulate to Biogen and some of which will be shared with Apellis shareholders. So we like the mechanism. It's a way to set some ambition. And if we were in a position to pay those, then that would be a very significant value-creating event primarily for Biogen, but also for Apellis.

We'll take our next question from Andrew Tsai of Jefferies.

Congrats on the deal. Since you guys absorb the nephrology infrastructure from Apellis, could the readout time lines for felzartamab's various Phase III programs be accelerated or pulled forward? Or maybe speak to how fixed these data time lines are between 2027 and 2029. And is there a way this transaction can help also increase the product success for these programs as well?

Yes. I'll take the first -- this is Priya. I'll take the first part. So I think we're very excited about felzartamab and the first readout that we expect as early as 2027. So we think that, that remains on track. We're very excited about that. And then the follow-up indications as we've communicated previously. We do think that this, as I think, has been mentioned by folks already on the call that this could add to our probability of success in terms of building the infrastructure, meeting the nephrologists where they are, really getting the engagement from both medical as well as commercial on the already approved products that we bring in with Apellis, but then having the opportunity to engage with nephrologists in various call points. So yes, we do think that, that has a synergistic and additive impact.

We'll take our next question from Brian Skorney of Baird.

Just on SYFOVRE, I think we saw a mid-single-digit sequential decline in sales from '24 to '25. Can you just discuss the dynamics there, which is really just 3 years into the launch and why you think you have confidence it will rebound and grow? And it also just seems like the injectable eye drugs have been somewhat at mercy to Copay assistance program funding. Are you accounting for some contribution to good days in your cost analysis? Or do you see a way where ongoing Copay assistance program funding isn't critical to sales growth in this group?

Just I think if you look at analyst forecast, I think there is a general feeling on the market growth that this will increase. There's probably some short-term effects that have an effect on the 2025 sales. I can't really give any projections on SYFOVRE. Obviously, there is a feature of the charitable contributions here in that marketplace, but I can't really comment on that. I think you have to -- we're looking at this more on a longer-term basis. And as I said, we're probably slightly conservative to where the market forecasts are. But again, if you look at the number of patients, I think if we can get more patient activation and particularly increase the persistence on treatment, then there is an opportunity for this product to grow.

We'll take our next question from Jason Zemansky of Bank of America.

Congrats on the deal. Maybe Alisha, to follow up on some of your earlier points and connect some of the dots here. But especially regarding the build-out necessary in nephrology, fundamentally, does this deal require approval of felzartamab to work? And are you looking for additional assets in nephrology?

Well, I can say that we have calculated a revenue synergy for felzartamab, but that was not included in our valuation model. So for the deal to work, it does not require that felzartamab has to be approved.

We'll take our next question from Ami Fadia of Needham & Company.

This is Poorna on for Ami. How much do you think you will need to expand upon the sales force to support the launch of felzartamab? And separately, how critical are the initiatives you mentioned that Biogen could undertake to boost Apellis efforts to achieving the consensus forecast?

Ami, could you repeat your question? Maybe operator, just make sure we can hear her line again. It was hard to hear your question.

Yes. One second.

But how much do you think you would need to expand upon the existing sales force to support the launch of felzartamab? And next, how critical are the initiatives that you mentioned Biogen could undertake to boost Apellis' efforts to achieving these consensus forecast that you have generated?

So I can start with the field force. We're not going to know until we actually see who the current team is calling on. But I do want to just remind you that you have C3 and IC-MPGN on sort of the EMPAVELI side, and then you have completely different indications now on the felzartamab side. So we will look to see where there can be synergies in call points where it may make sense at certain accounts but they are going to be quite different launches.

And so we will need to make the decision at some point in time as to whether it's more efficient for a successful launch to have focused resources or if they need to be combined. But we could end up even in a hybrid space as well. I think for things like the medical teams, we're going to be looking at, does it make sense for MSLs to basically be able to talk about all of them in front of the nephrologists. And so those are things that still remain to be seen, and we won't know until we actually get to know the teams and understand where they're focused.

We'll take our next question from Myles Minter with William Blair.

Congrats on the deal. I want to talk about nephrology. I wanted to ask about ophthalmology and your appetite to do additional deals there. I know you've had a Nightstar acquisition on the gene therapy side, which didn't go in your favor. But now with the commercial product in the bag, just wondering whether you're going to start building a franchise around that.

It is true once you have a franchise, you could think about are there things that you can add on. I don't see us necessarily doing acquisitions on that front. I think we have looked at a number of licensing opportunities in early-stage research or early-stage development that we could develop alongside that. But that would be developed over time. But I don't necessarily see that we're going to go out shopping specifically to do that. But it's clearly a potential opportunity for us over time.

We'll take our last question from David Amsellem of Piper Sandler.

This is Naoki on for David. So this is another one on IP, but with composition of matter expiring around 2032 to '33, can you talk to more details on your diligence surrounding additional IP and your confidence in the lengthy exclusivity runway to the late 2030s or more and articulate other potential barriers to generic entry?

Yes. So obviously, you have the filed IP. You also add patent term extensions to that. And then there is an entire patent portfolio that Apellis have got granted issued patents on that include formulations and methods of use. So we looked at the entire patent portfolio and made our assumptions on the appropriate loss of exclusivity and also the erosion curves post loss of exclusivity. So we feel comfortable we've done the appropriate due diligence and can see how the patent estate will unfold.

Well, thanks, Adam. Appreciate your time today, everybody. And if you've got additional questions, just reach out to the IR team at Biogen. Thanks again.

Thank you, everybody.

This concludes today's call. Thank you for your participation. You may now disconnect.

Great. Thanks very much. This is going to be an interesting 45-minute discussion on a number of topics within the Biogen pipeline. With me is Diana Gallagher, Head of Clinical Development; and Stephanie Fradette, Head of the Neuromuscular Development Unit. Maybe just you can each of you just sort of briefly introduce yourselves, how long you've been at Biogen, and then we can get right into it. I think I wanted to start with maybe talking about tau, but we can cover a lot of stuff. So Diana, do you want to go first?

Sure. Thanks for having us, Paul. So my name is Diana Gallagher. I have several of the therapeutic areas of Biogen, so the Alzheimer's, the MS and the immunology portfolios, and I've been at Biogen almost 11 years this month, yes.

Awesome.

And Steph Fradette, again, thank you. Thank you for having us. I lead our neuromuscular development unit, and I've essentially been at Biogen for the last 16 years, believe it or not, and really focused on our neuromuscular efforts for over the past decade.

Okay. Awesome. All right. Well, great to talk to you both of you, and thank you both for taking the time. So yes, so I'm super interested in this tau readout. I have followed this space for a while. We were always somewhat skeptical on the antibody approach. And it feels like the oligo approach is super interesting, not just because you can knock it down at the source, but also because your PET data shows there may be actually like a clearance mechanism for existing tau.

So super, super interesting. I feel like the question though, that everyone has when they look at this target and think about the amyloid experience is the whole correlation first causation question. So maybe just to like walk through the evidence for why tau is a disease driver and not just a correlate. What do we know about tau's role in the disease process? And again, what is out there that sort of suggests that you can actually modify the disease by reducing levels of tau in the brain?

Yes. Thanks for the question. I mean we feel quite confident that tau is an important target in Alzheimer's. It is 1 of the 2 pathological hallmarks of the disease. And the emergence of tau pathology really coincides even more closely than amyloid prevalence with the coincident cognitive decline. So there are lots of theories about how this works, but the idea that the amyloid comes in and deposits and then the tau is being sort of uncaged and moving through the brain, very coincident with cognitive decline and they're sort of working in parallel is a hypothesis that is out there and one which we're really interested by.

It is, as you noted, a hypothesis that needs to be tested. And we think that the baby is a really interesting way to test that hypothesis to establish for the first time, proof of concept, right? Because the antibodies, as you mentioned, have not been able -- they've really been targeting the extracellular tau, but we believe that the best way to fully test the hypothesis to really shut down all the isoforms and see what happens. And we've been able admittedly a small 1b to sort of show evidence that the ASO approach, the MAPT ASO can do that.

We see it knockdown in the CSF. We see the signal on the tau PET. And now the CELIA trial is designed to say, okay, if we do that, we do it for a period of time over 18 months, what does that look like on clinical endpoints? So highly innovative space and hopefully begin to answer the questions about that relationship between clinical endpoints and manipulating tau.

Yes. Okay. Great. Maybe talk about like the safety of the approach, not just like the data you've seen so far, obviously, like I think is the most important. But on a theoretical level, like what do we know about the role of tau in adult brains? Like I think a lot of the literature in tau describes it as like maybe one quote I found was an integral cytoskeletal protein. Like is it critical in the brain? Like do we know that? What have you seen so far? And like what are the theoretical risks, if any?

Right. So yes, I think that tau does perform critical functions related to structural integrity of neurons. And so it's never been our sort of idea that we would knock it out completely. Genomic data, however, suggests that up to 50% reduction in tau may be associated with really no gross neurological effects. So we feel like we've targeted a degree of knockdown, which is sufficient to test the hypothesis and manage safety.

Of course, we acknowledge there's still questions there, which is why we're testing different doses and different dosing paradigms in that to really establish the safety and tolerability, that PK/PD relationship and then ultimately with efficacy. So we're definitely trying to explore lots of different elements in the CELIA study, including safety and tolerability for MAPT ASO...

Okay. But like right now, you feel fairly comfortable about the safety of like 60% knockdown, for example?

Yes, yes. I mean I think that's on the range of what we saw in the Ib study in the CSF. And so of course, we're continuously surveilling and monitoring how the patients are doing in the trial. And so we have not only the main trial, but a long-term open-label extension. And so yes, we continue as planned. And then, of course, it's ultimately that relationship between efficacy that we are waiting to read out.

Yes. Okay. As it relates to tau reduction and like how much reduction we need, I remember like intimately well, the analysis you guys laid out of the aducanumab Phase IIIs, right, and how getting to that much bigger amyloid reduction was really the difference between having meaningful efficacy or not. In the context of that, like do we think that this level of tau lowering is enough? Like is there anything we can point to? And also, how do we know that maybe the tau lowering you're seeing with IT delivery is in the right areas of the brain. So maybe you could sort of speak to both of those points.

Sure. I'll take the second one first, which is, are we hitting in the right regions. And so that has been something and was a big point of the Ib to -- which wasn't sort of designed to look at clinical efficacy, but really was designed to look at CSF and then examine on tau PET. And so we were able to see in the Ib reductions in tau PET across multiple areas of the brain that we believe are relevant, and that's in the public domain.

Happy to send it back over if folks are interested. But we do feel like we're having nice engagement there, both in the CSF and on the tau PET studies. Again, the question becomes, to your point, the second question, we don't know, and that's one of the things why this is such an exciting, interesting, but really still pioneering study to say, okay, now how hard, how much, how long and how does that translate into efficacy? And so that's something in this -- as we read out top line from CELIA will help us start to piece together.

Yes. Yes. Okay. Makes sense. Maybe talk a little bit about the study itself. And do you feel like this study is well powered to elucidate an efficacy signal? Like what would be the hurdle for success?

Yes. So we think about this as a true proof-of-concept study that's going to allow us to sort of, as you said, understand the safety and the tolerability, look at the target engagement, both in the CSF and on the imaging studies and then look at the 2 different dosing paradigms and their relationship to clinical endpoints. So it is out to 18 months with CDR sum of boxes, very -- as well as multiple other cognitive endpoints that we're studying.

So we feel like we'll be able to understand those relationships that would allow us to decide how, when, if it makes sense to move to the next trial. But there definitely will need to be additional evidence. This is a proof-of-concept study. And so our expectation is we'll need to continue to study this to further frame out that relationship between dose and clinical effect as well as an expanded safety database and all the things you need to do for a registrational novel entity in a disease like this.

Of course. Yes, of course. Maybe to clarify for people listening, like is the thought -- obviously, the thought would be you'd need another like big Phase III. But is the thought that this is a robust study where like the decision you make is going to be a p-value-driven decision? Or is it more of a qualitative whole picture decision? Does that make sense?

It does make sense. And I think we really are thinking about this as a proof-of-concept study for internal decision-making that allows us to determine how we want to move forward with the asset. It is not sort of intended to -- and it would be part of a submission and supportive, but it's not intended to be something that we can use in the absence of other confirmatory data. So we feel like to help us figure out key questions, safety, tolerability, dose dosing paradigm, it's positioned well for that. But again, as we said, we're trying to answer a lot of questions in a field that no one's ever sort of been able to engage the target this robustly. So we'll know more as we start to pull down the data and see.

Yes, fair enough. Okay. You guys are evaluating every 3 months and every 6 months. Do you think every 6 months is going to be enough to get there? Maybe talk about like the modeling work you've done or any data you have that I guess you have some durability data that supports this dose. I feel like that's obviously super important given the logistical challenges to uptake that IT administration could bring.

Right. Yes, it's a great question. And just again, coming back to it, as you sort of alluded to, we're first trying to understand this relationship between how much you need to engage the target, the extent which you need to engage it to see clinical efficacy. And then that's even an additional question for what the durability of that sort of looks like. So this was really designed over 18 months with the sort of continuous dosing in these 2 paradigms to allow us to see, is there a difference?

And we do have the open-label extension data as well, which can help us inform what continuous sort of looking at the target, knocking down the target looks like. And we'll have to start to see if there's differentiation, if there's separation between those doses, what that separation looks like from a PK/PD, but then is there any different clinical endpoints, I think will allow us to sort of determine what the rationale for dose selection would need to be in a future study.

Yes. Okay. Can I ask a question just like maybe this is a little bit of like a naive question. But when you think about like tau PET and what tau PET is telling you about happening in the brain versus like the p-tau assays we have, like 181 and 217, obviously, ones in the plasma, but like are those getting at the same change in the underlying subtypes of tau? Or could they be telling us like sort of different things about what's happening in the brain?

Yes, I think it's a great question. And I think we're still sort of understanding the relationship between the peripheral biomarkers and how much they're reflecting amyloid and tau sort of burden. So we feel like the reason we're looking at the CSF and we're looking at the tau PET is to really see in the organ of interest being the brain, really characterizing that pharmacodynamic activity and understanding that pathology as best we can, neuropathology with imaging, what that looks like on clinical endpoints.

And then it took a long time to get there with amyloid therapies, sort of understanding ultimately the relationship between centiloid reduction and clinical endpoints and how we're bridging that back to plasma-based biomarkers. I think we're still at the earlier part of that journey, but hopefully, we'll get there, but we really are relying on the CSF and the imaging. And then we'll continue to augment, of course, with the blood-based biomarkers.

Right. Okay. Okay. Chris Viehbacher has talked about Biogen having a backup non-IT administered tau pipeline asset. At a session I hosted with him and some investors, he talked about like that being a super important part of the strategy here and sort of making sure that, that was lined up ahead of this data readout in this chance that this is positive that you can move forward with something like that. What else can you say about this candidate you guys have in your pipeline? And if this Phase II study is positive, like how ready to go is this asset?

Yes. I think just as you said, taking a step back, Chris articulated it, and I'll just reinforce that as a company, we're very focused on sort of answering these questions and improving the patient experience across our portfolio. So this is really exciting what we're doing and assessing here with BIIB080, but we are also working on next-gen platforms across different tissue types, including the CNS. And they are preclinical programs. So we're not able to say too much more at this point, but hopefully can share more in the future, but it's definitely a big focus for us as we think about not just do we get the right target and bring it to the right patients, but are we doing it in a way that is the best modality and the most convenient and efficacious way for them.

Okay. Can you -- are you able to answer if this would be something like that's with the same ASO, but like a conjugate or if it would be like a different candidate entirely?

Yes. I think we'll share more data as we move it further in the pipeline. Yes.

Okay. Okay. All right. We'll have to wait and see. All right. Well, in the meantime, I want to talk about one more Alzheimer's topic and then maybe we can ask you, Steph some questions on the muscle side. But on Alzheimer's, right, there's obviously also a ton of anticipation around the presymptomatic studies, and we'll get the TB3 readout likely before the AHEAD 3-45 readout.

So I think one of the major questions of TB3 hopefully is positive, right, is sort of what is the implied read-through onto the lecanemab presymptomatic study. So maybe talk about the design of your trial, like the thought process behind patient selection. And when we get the data from Lilly, what -- how will you interpret the read-throughs on to the probability of success for your own trial?

Right. So we definitely are interested and see the potential for anti-amyloid therapies in presymptomatic Alzheimer's as a significant opportunity and feel like the AHEAD 3-45 study is really well positioned to answer the question on early intervention. This collaboration with Eisai on this trial is really designed to study a broad spectrum of truly presymptomatic patients. So just to sort of walk through it, the AHEAD 3-45 is looking at patients with an amyloid burden greater than 40 centiloids and is trying to determine if LEQEMBI can prevent cognitive decline in these "low plaque level patients," right?

So clinically don't have evidence of cognitive decline, but definitely have the presence of amyloid at this level. And it's using a validated endpoint, the PACC-5, which has demonstrated sensitivity to detect cognitive changes in patients like this. So different than CBR Sum of Boxes, and we're hopeful that we'll be able -- because detecting that treatment effect, even though we're going out 4 years, it is a more nuanced in early disease and with progression being slow, but still happening, we want to be able to detect that.

So that allows us to look at that sort of low amyloid level. And then we have AHEAD 3-45, which is even lower, so 20 to 30 centiloids and looking at further accumulation of plaque. So really can we sort of attenuate accumulation. And then if we can attenuate accumulation in AHEAD 3-45, then we start to say, hey, we're looking at both amyloid accumulation at low levels as well as preventing cognitive decline. It's a pretty powerful data set to bring to bear about what an anti-amyloid therapy can do in this presymptomatic group over 4 years.

So it takes a lot of data to see what's possible here. So it's a big investment. I think TB3 is designed differently, but also really interesting. It has, based on what we can see in the public domain, a little bit more of a skew towards sort of presymptomatic or kind of right sort of at that tipping point, not quite as early as ours. So I think we'll be answering different questions. If it works, first of all, great for patients and families who feel like -- and Steph and I go to meetings all the time where people, particularly with familial forms are like, I want -- I know what's happening, like I want to get on a therapy.

This is like a ticking time bomb. So I think this allows us -- that will be good, but it won't answer quite the scope and the breadth that TB3. So positive readout, I think, reads through. "negative" we have to examine and then also say, hey, we have a different data set, possibly different endpoints as well as different inclusion criteria. So we feel like that's a really robust study to answer the questions we've designed.

Yes. Okay. That's great. So we saw a 30% disease slowing about in the early MCI population for lecanemab and donanemab. And obviously, that varies a little bit based on the cut. But how are you thinking about what a realistic effect size might be in presymptomatic? Like what's the evidence for this to be a bigger effect? And have you powered the study assuming a bigger effect? Like what's your confidence level there?

Yes. You're right in the sense that supported by Phase III data from a low and no tau group, which suggests like the earlier you go in disease, you might see a bigger treatment effect. And of course, no one's ever designed it exactly like we've designed AHEAD 3-45. So you have different burdens of amyloid and it's going to be impossible to make it -- we literally can't compare like sort of presymptomatic and symptomatic of what's going to happen. We have to run the trial. But we do see in the low and no tau subgroups, so in the populations that we feel like are earlier in disease progression in the long-term extension, 70% of patients have had no cognitive decline and 50% of patients have shown even some improvement at the -- versus baseline at 4 years with continuous lecanemab.

So again, we'll have to test it in the AHEAD 3-45, but it's this idea coming from the open-label extensions and other supportive data that the earlier you go, the more likely you could be to see a more dramatic attenuation or even holy grail. So we'll see it when we see prevention of cognitive decline. So we can only extrapolate from that existing data and look at the slightly earlier groups, but they're not -- I don't want to say they're comparable to how early AHEAD 3-45 is.

Yes. Okay. Okay. I guess with TB3 is being set up as being event-driven, it's maybe like more intuitive that they could make a claim around like a relative risk reduction on the proportion of patients that progress to like a more clinical Alzheimer's phenotype. Would you -- if the AHEAD 3-45 is positive, would you be able to make the same type of claim or the same types of like data cuts that would be obviously helpful from like a marketing and digestibility perspective?

Yes. I think it's a great question. It's -- we'll obviously look at all the data that they generate, and we are also collecting a really extensive amount of both biomarker as well as clinical data. So I think -- and we will have different subsets of patients in all the way from the sort of above 40 and then down to that 20 to 30. So I think that that's possible. And we will have 4 years of data, which will be a pretty robust set of analysis to look at. So I don't want to speculate before we see anything, but I think we're very happy with the way we've designed it, which allows us to characterize the treatment effect.

Okay. Okay. And that data is 2028, correct?

Yes.

Okay. Okay. Maybe last question on Alzheimer's, but just from like a logistical and treatment capacity perspective, I think the cynical view on presymptomatic is something like it's been super challenging to even get to a high treatment rate of the symptomatic population, right? Like is the world even ready to start trying to treat presymptomatic patients from both a bandwidth perspective, a diagnosis perspective, like an insurance perspective? Like what would you say to that? Like how do you think about this as sort of an addressable commercial opportunity from a pragmatic perspective?

Yes, it's a great question. And I think what's exciting is the world is changing, and we're seeing it happen like even in real time. So there are key enablers that are going to need to be implemented for that to happen. And I think you're starting to see what would they be blood-based biomarkers, diagnostics will be important, right, to make a diagnosis. Even in regions where there's a lot of access to neurologists as well as imaging studies, it still takes time for patients to sort of move through the funnel.

And so the majority of neurologists are using blood tests now to at least -- they're starting to get comfortable with them and then go to confirmatory imaging studies. And we start to see like how comfortable people will get with that? Can they get comfortable with blood-based biomarkers alone as a move, we're starting to imagine a scenario where that could happen. There may even be a scenario where it starts to amyloid testing at or after a certain age will become part of a panel, right? You start to look at what's your accumulation over time look like in conjunction with other potential risk factors that you have and sort of monitoring you for that.

And the more data we collect and understand in natural history studies, the more comfort we will gain around time to intervention. So I think that diagnostic piece is really huge. We know even in the AHEAD 3-45 study by implementing blood-based biomarkers as a screening event before confirmatory imaging, you reduce by 50% the screen fill rate. So it is feasible. And then the subcu would be the other part that a route of administration for at-home use will also be. And sort of -- I think those are factors that may allow primary care doctors to play a bigger role because we can't load this all on to the neurology community. We need an easier way to sort of make the path easier for PCPs too.

Right. Okay. All makes sense. Great. All right, Steph, thanks for being patient here. But I appreciate you joining. So yes, I mean, obviously, a topical time for your group as well with salanersen and high-dose SPINRAZA. Do you want to maybe just kind of level set and talk about some of the MDA presentations for salanersen, and then we can talk more about sort of positioning and next steps there?

Absolutely. So just to take a quick step back, salanersen is an investigational ASO. It was designed with novel ASO chemistry that's really designed to increase potency. And that allows us to target optimization of efficacy, but doing so with once yearly dosing, which is obviously a huge advancement for the field if successful. And we were able to present data from our Phase Ib study. I get a lot of questions about why did we design this Phase Ib study the way that we did.

Obviously, designing a Phase I study for an investigational therapy in a landscape that's relatively crowded and has effective therapies available, we had to make choices. So this particular study was designed or run in individuals that had received gene therapy, and they had received that gene therapy at least 6 months prior to enrollment in the trial, and they were perceived to have suboptimal clinical status for their investigator.

And so there was clear clinical evidence for unmet need, the potential for additional efficacy. This, of course, wasn't a powered efficacy study. We really were focused on looking at safety, pharmacokinetics and then looking at both biomarker and clinical outcomes in a more of an exploratory way. And so the study enrolled 2 age groups, 6-month to 2-year olds and a 2- to 12-year-old cohort, and we looked at 2 different doses. So we looked at both a 40-milligram and an 80-milligram dose. And so really a number of different cohorts there and the total end was 24. And sort of the new news that we presented last week was that we now had at least a year of follow-up in all 24 of those participants.

And so we were able to sort of take away a couple of different things. First and foremost, both the 40- and 80-milligram doses were considered generally well tolerated and both plausible for moving forward into Phase III. Of course, we were looking again at pharmacokinetics across those doses. But interestingly, we've learned quite a bit, perhaps more than we even expected with regards to the biomarker and clinical outcome data. We saw that consistent with the fact that these individuals had suboptimal clinical status, they also had elevated neurofilament levels. So in the good majority of these patients, they came in with levels of neurofilament that exceeded what we would expect both in an untreated and treated population of SMA.

And so again, consistent with sort of the active neurodegeneration that we'd be expecting in this population. And once we were able to initiate salanersen, we were able to bring those levels down rapidly and sustain those reduced levels of neurofilament over time. And then on the clinical outcome side, again, we're -- it's a heterogeneous population, but what we're seeing is in many of these cases, these infants and children, I should say, we really wouldn't be expecting to see continued improvement or attainment of novel new WHO milestones because in some cases, they had been, for example, 5 years out from receiving gene therapy.

And once salanersen was initiated in these children, in many cases, they were able to actually achieve a new milestone. And so taking a step back, this gives us confidence that salanersen has the potential to be a differentiated therapy in the SMA landscape and gives us a lot of confidence in moving ahead with these Phase III studies, it really has informed the design of these Phase III trials, and we're looking forward to getting them off the ground.

Okay. Great. At this point, do you think salanersen is clearly more effective than SPINRAZA or even high-dose SPINRAZA? Or is that -- is the jury still out there? Like obviously, once annual is a huge advantage unto itself, but how are you thinking about the other piece of the puzzle?

Yes. And to that point, the goal of salanersen, of course, less frequent dosing is important, but we can't sacrifice efficacy. Efficacy is front and center in the minds of clinicians and families in the SMA world right now. And so while I can't say anything definitively, we haven't run a direct head-to-head experiment, -- what I will say is it's designed to achieve concentrations and efficacy consistent with the high-dose SPINRAZA. So we're really trying to maximize efficacy while also spreading out that dosing interval with this program. So we have more to learn in the Phase III setting, but I think the early signals tell us that it's doing something unique and time will tell.

Okay. Do you want to talk about the design of that Phase III study? And I guess the SMA -- the world has really changed a lot since the SPINRAZA pivotal studies were conducted. So I guess maybe talk about the design and then like when that study reads out, like is it going to be clearly comparable where we're going to be able to answer the question around similar or better efficacy than the standard of care?

Yes. So there are 3 Phase III studies that we've announced and provided detail on over the last week. The heart of all of this is the pivotal. So it's the STELLAR-1 study. This is a trial that we're conducting in treatment-naive presymptomatic infants with 2 or 3 SMN2 copies. And what we're basically looking at is are they able to achieve key milestones, so sitting in the 2 copy population and walking in the 3 copy population within normal development time lines. And so we're really trying to -- this is a study that we will look to, to establish salanersen's sort of effectiveness as a monotherapy.

We are also running a supportive STELLAR-2 study, and this study will enroll individuals that received gene therapy pre-symptomatically. And 6 months later, they're randomized to either receive salanersen or sham controlled. And so again, here, it's different than what we did in Phase I, where these patients had over evidence of suboptimal clinical status here irrespective of that. we're going to be able to look to see if you are initiating salanersen in that population, what's happening. And putting those 2 studies together, we'll be able to look at monotherapy salanersen relative to monotherapy gene therapy relative to the initiation of gene therapy followed by salanersen in a presymptomatic population.

So this is really important as we think about the future sort of future treatment decisions for the incident population in particular. And then on the other side of the coin, we have a study called SOLAR, that's going to be conducted in teens and adults. And this is a study that will enroll both treatment-naive and risdiplam-treated individuals, 60 treatment naive, 30 that are switching over from risdiplam, though I will say after spending the week with the SMA community, both at MDA and SMA Europe last week, we're getting a lot of push to increase the size of that risdiplam treated cohort.

There's a lot of excitement about understanding that specific population. And so that will help us understand, again, the other -- the broad spectrum of SMA individuals both treated, untreated and across the different age groups and phenotypes to really help us understand the positioning of salanersen in the future landscape.

Yes. Okay. Okay. Got it. Makes sense. So then maybe in the context of this, do you want to talk about the high-dose SPINRAZA program? And just in general, like how does that fit into the -- not just the treatment paradigm in kind of the near to midterm, but like the overall portfolio that you're building over the long term in SMA?

Yes. So I would say that we're lucky with SPINRAZA because it's the only therapy that has the opportunity to optimize -- that we have the opportunity to optimize, I should say. And so we started the development of this high-dose regimen several years ago. And really, this is our step into a next era of treatment in SMA. I think we're just now as a field coming around to the fact that while the first generation of therapies has done a tremendous amount, it's completely changed the trajectory of SMA, there's still a great deal of unmet need.

And while treating an infant pre-symptomatically may allow that infant to walk, which is -- was completely unheard of 10 years ago when we were having conversations, their gate may not be and in many cases, is not normal. And so we know that there's clear unmet need. We know that there's an urgency to treat. We hear a lot of clinicians say, I don't want to look back 10 years from now and wish that I had done something different. We know we only get one pool of motor neurons for life, and we're sort of consolidating all of the tools that we have that tell us about the health of those motor neurons so that we can act today to try to achieve better outcomes tomorrow and high-dose SPINRAZA is a huge part of that.

And so we're working to try to get high-dose SPINRAZA to people living with SMA around the world. And then ultimately, we would anticipate that many of those individuals would choose to transition over to salanersen if and when it is approved and available.

Yes. Okay. Great. All right. Well, maybe in the last 10 minutes or here, we can just cover the litifilimab readout and maybe a quick other question on on DAPI and Felza. But starting with the litifilimab data, which is coming soon, Diana. So maybe I'll just -- I'll ask you like a total weighted question and hear your response. So I think on the investor community, there's like people have become just inured with how challenging lupus can be and how you can have these Phase II data sets that look promising and then the Phase III doesn't replicate.

And I think in the context of that, when I get questions from investors on liifatelimab, it's like it looks like the drug is active, but the p-values are not 0.01, they're kind of closer and then the endpoint in the Phase III has changed. And so just in like the backdrop of that, maybe help us make sense of the Phase II data and like how confident can we be going into this Phase III study? Like is this the kind of study you feel like this is fairly derisked and like we understand it's overpowered? Or are we still in that gray zone where we're trying to fully prove out that this drug works as well as we hope?

Sure. Great questions. And I think it kind of falls into 2 different pieces, like asset and then sort of lupus drug development and execution. So maybe I'll sort of start from the asset standpoint. We know that manipulating -- BDCA2 is a better target. It's a homegrown molecule. We've been very interested in it for a long time. Like it's been -- we have a deep understanding of this mechanism and manipulating that PDC biology, all the way from a skin study, 1b, really beautiful heavy biomarker 1b study that we did.

Then that gave us the confidence to move into the proof-of-concept studies, which are the back-to-back papers in New England. And there, we were really -- and it's been methodical all along the way, right? And there, we're really showing on the SLE side, what impact does this formerly BIIB059 or now litifilimab, what does litifilimab do on skin and joint effects in patients with lupus and so you saw that their reduction in tender swollen joints as well as improvement on multiple skin metrics as well as SRI-4.

So that was a proof-of-concept study. It was not designed or powered to be as big as what you'll need to do for a Phase III study, but it gave us the confidence to move into a Phase III study. And remember, we're doing 2 Phase III studies. So we're going from that proof-of-concept study to then power 2, 540 patients each on SLE trials. So definitely the ability to answer the question with the replicate SLE studies powered for SRI-4 I think we feel good about. It did require and as it should to go from POC to Phase III, really expanding that.

And then as you say, people have POC and they go to Phase III, what do you do differently? And I think, first of all, right target, which we feel like we have. Second, right patients. You really have to rigorously look at those inclusion/exclusion criteria and make sure you're putting the right patients in. Lupus is a complicated, really heterogeneous disease. And so really...

So how do you do that to try to homogenize the population?

Yes. I think it's about looking at ensuring patients who have active disease activity despite standard of care, right? So you really don't want the mildest form like early tiny bit of rash. Are we really sure they have lupus to begin with. We really have worked very hard to get the right patient population in there. And then it's diligent, diligent execution. I mean running global -- we've learned a lot in the past decade ourselves as well as the field, what it takes to run global trials, the level of adjudication that it's required, the level of training at multiple sites to help ensure that we're sort of enrolling the right patients and then collecting the data really judiciously.

So I would just say we feel the Phase II results were in both SLE and CLE quite robust, allowing us to make this decision to go forward in CLE. So just let me say one thing about SLE. I wouldn't -- I don't think of it as changing the endpoint because the POC wasn't powered or designed to hit on SRI-4 but we collected SRI-4 and that is the primary in the replicate Phase IIIs. And in CLE, it's that CLASI endpoint, and that's something we worked incredibly hard on looking at those effect sizes.

You see it in the New England paper, and we're about to share new data on the Phase II portion of the AMETHYST CLE trial. So we're also in that Phase II/III for CLE as a late breaker at AAD at the end of this month. So again, this idea, are we manipulating the biology with litifilimab, we feel like we are. And so we're excited to hopefully get registrational data at the end of this year on SLE and followed by CLE. So, I hope that helps.

Okay. Great. No, that was awesome. Okay. Fantastic. I'm going to go quick...

DAPI, I can jump to that quickly. I mean their first Phase III, one of like only the third positive Phase IIIs that we've seen in SLE. I think there's a lot of -- we didn't see the dose response in an -- like the way the dose response in the Phase II, but we learned from that DAPI Phase II adjusted in Phase III, executed against Phase III, hit the primary endpoint as well as have multiple evidence of supporting data of what matters to patients beyond BICLA or SRI-4, which are these composite endpoints, but we saw meaningful tapering of steroids.

We saw reduction in flares. We saw fatigue, improvements in fatigue, which really, really is important to patients. They deal with a lot in lupus, but if you ask them what are -- like what's one of the most debilitating symptoms, they say this just absolutely profound fatigue. So seeing that consolidated effect by manipulating CD40 biology suggests to us we're really having significant multisystem impact in lupus with the CD40 pathway.

Yes. Okay. Great. And for CD40, like can you talk a little bit about there's this sort of safety history here with, I believe, a subtly different approach. Remind me if it's either receptor or ligand, but like what's the context there? And what's your level of confidence that the TI for DAPI is wide and you're not going to run into this?

Yes. So you're right. Historically, the first generation of the CD40 ligand molecules were the -- they had an Fc Fab fragment that was believed to be the causal for platelet activation and aggregation, which led to clots and thrombosis and negative events. So this -- our DAPI is designed specifically and engineered with an Fc free Fab fragment. And so that was always top of mind for us, particularly because lupus patients do have increased risk of clotting just as part of their underlying disease biology.

And so we engineered that completely out. And so it's a heavily PEGylated molecule that allows us with the Fc-free Fab fragment. And based on the safety and tolerability that we've seen so far, here is quite differentiated from first gen, in terms of any risks of that clotting above and beyond what is endogenous to the disease.

Okay. Okay. Great. I still have a list of a few other things I wanted to ask, but I'll just kick one last one, Felza. Three indications, right, that you talked about AMR, IgAN, PMN. How would you rank order where you're most enthusiastic, not just in terms of probability of success, but probability of having like a truly differentiated product in an area of unmet need?

Yes. So I think you're right. One fun thing about Felza with and immunology in general when you go after is a pipeline and a product. And so I think we're excited about multiple aspects. As you said, we see that antibody-mediated rejection as a really exciting and interesting sort of sea change for patients who are immediately go through, have renal failure, then end up getting a transplant, then have their transplant rejecting, sometimes pretty within 6 months. And so that proof-of-concept data that we generated where you basically initiate the therapy and you can see this profound -- you're already an antibody-mediated rejection and we can resolve that is really pretty exciting.

And that's an opportunity that's probably underappreciated, 11,000 patients in the U.S. who have AMR 6 months after a transplant, and we saw 80% resolution at 6 months in the Phase II. So obviously, we're in the Phase III. We need to sort of replicate that, but that's quite exciting. And then in terms of other drivers, you're right, the opportunity in IgAN is also, I think, really exciting. We have the potential to bring a differentiated approach where you sort of come upfront with this therapy and then you potentially have these holidays, which, again, is really meaningful for patients to have these opportunity.

Patients always want as much medicine as they need and no more. Sort of fix me and then can I get a break. And so that's a really interesting paradigm shift there for IgAN. We know it's a crowded space, but there's a lot of unmet need. And then, of course, membranous is another really debilitating condition. So if we can bring something, particularly if people after first line need to go to another one, I think it's exciting. So it's all 3, each for different reasons. But I would say that having 3 Phase IIIs with this asset positions us really nicely to move forward.

Yes. Okay. Great. Well, I know we could have talked about a lot more, but I really appreciate you all taking the time, and we got through a lot of topics and interesting details. So thank you so much, and thanks, everyone, for dialing in and listening.

Thank you, Paul.

Thanks, Paul, for having us.

Great.

We're good. Okay. All right. Let's start back. Thank you, everybody, for joining us for our next session. We -- I'm Marc Goodman, one of the biopharma analysts at Leerink Partners, and we have Biogen next. And very interesting, Head of West Coast Hub, Uptal Patel. I'll let him give a little bit of background of how we got to the company and how this West Coast Hub has been started, but very interesting for the company to do that through this acquisition that you'll hear about. And obviously, a very interesting asset that we're going to go through all the different indications and stuff. But I do think maybe just for 60 seconds, just give your background and how the West Coast Hub is like what does it look like and how it's evolved, what the goals are?

Sure. Well, my name is Uptal Patel, as Marc mentioned. Thanks for having us, and we'll be making some forward-looking statements. So just the usual disclaimers to look at the risks in our SEC filings because those results might end up differing materially if I talk about any future risks. So I'm a nephrologist. I was in Academia, took a career detour into industry to try to develop new treatments for people with kidney disease and joined a company a few years ago called HI-Bio or Human Immunology Biosciences, that was really focused on developing targeted immune therapies for severe unmet needs.

And they had licensed a molecule, felzartamab, from a German company called MorphoSys that had started proof-of-concept studies in 3 different indications. All of those read out positively, and we were looking to advance them into Phase III and get this to patients. And Biogen was a wonderful partner that emerged, aligned with our vision of advancing all of these and saw the broader potential potentially for this targeted anti-CD38 approach and decided to build a unit around it, around the original HI-Bio team that formed in South San Francisco that gave Biogen a connection to the West Coast that they had lost, but the IDEC campus years ago, allowed us to retain some of that start-up feel and act quickly.

And in the past year, we launched those 3 Phase III studies. And so we were 40, 45 people initially. We've hired over 100 people and establishing a bigger team as well while we pick on new programs. There's also a connection to the research unit that Biogen has been evolving, with its new focus in immunology that goes back many decades, but a more dedicated one with the pipeline that is bicoastal. So part of the research team sits in the West Coast as well as the East Coast.

Thank you. So you mentioned felzartamab as the key asset. I don't know if you mentioned the name, but that's the name that you got. Let's talk about that product. Let's talk about the different indications. What was the first indication that was the most obvious?

The most was actually primary membranous nephropathy. That's a quintessential autoantibody-driven disease. 80% of people with that have an autoantibody that's very specific to a specific protein on the podocyte, one of these cells in the kidney that helps form the filtration barrier. And that's to a protein called PLA2R. So anti-PLA2R positive membranous nephropathy was an indication where we had a few different proof-of-concept studies. They were our initial readouts, and we were very excited about moving that forward, but investors actually didn't like the 2-year endpoint that was required.

This was during a tough funding environment. We still believe in it and have advanced that program to Phase III, see it as an important opportunity. But what kind of stepped in front was antibody media rejection, some really compelling results from our Phase II proof-of-concept study in AMR, kind of put that as the lead indication, and that indeed is the one where we'll have the data readout most early.

So should we start with AMR?

Sure.

Go through that, and then we'll come back to that one. But that was the idea. That was the engine. Okay. So let's go through AMR, talk about...

Yes. So AMR stands for antibody-mediated rejection. It's a complication in people who receive kidney transplants. It is one of the leading causes of late kidney transplant loss. Once people develop it, over 75% will lose their grafts within a matter of years. The median time to graft failure is about 2 years. Classically, it was believed to be caused by donor-specific antibodies. So antibodies that the host develops against the recipient's organ. And -- but there was evidence that anti-CD38 approaches could work and a group of investigators approached MorphoSys, asked to be supported for an investigator-initiated trial, and they ran that trial in 22 people at 2 sites in Europe.

And it was a small study, but very well done by 2 key investigators who had been part of the AMR trials for the prior few decades, knew what they were looking for. All of those other proof-of-concept studies were 20 to 40 patients of similar size. And they designed it very well to include serial biopsy samples. They had AMR diagnosed prior to inclusion at 6 months and 1 year. It was a 1:1 randomized trial where people were dosed with felzartamab. They were randomized to that arm for about 5 months, our 9-dose regimen given over 5 months. The biopsy assessment at 6 months sort of shortly after stopping that course of therapy was the primary endpoint.

And that showed dramatic reversal of AMR by histology. And that's a diagnosis that is defined by some criteria called the Banff Classification criteria for rejection. And the key score in it is a component called the Microvascular Information Score, which scores the inflammation around the vessels of the glomeruli and the peritubular capillaries. And what we saw in that small Phase II was that not only did over 80% of people have reversal by histology, but over 2/3 of the participants treated with felza had scores that went down to 0, and that had never been seen in the field before. So they knew that this therapy was potentially transformative, and we quickly tried to get that moving forward into a Phase III, which is now being run and look forward to sharing updates on that.

Yes, let's talk through. So what is the design of it?

So the Phase III design is larger, 120 patients. It's global, mostly Europe, North America, South America, Australia and New Zealand. And people will be randomized to felzartamab or placebo. And similar design, biopsy is necessary at inclusion. Primary endpoint is at 6 months and people will be followed to 1 year. Same dosing regimen for the first 6 months for felzartamab. But what we saw in the Phase II is that the AMR activity came back in those who had therapy that was stopped. And so we're going to continue dosing into the second 6 months for those originally randomized to felzartamab. And because of the overwhelming efficacy we saw in the Phase II, the people on placebo will cross over to active therapy at 6 months. And so that was really important because dropouts have been an important part of these trials. We didn't want to.

And you want to make sure they actually want to be...

We want to make sure patients stay and complete the study.

Yes. Interesting. Okay. And -- so the study is just...

The study is enrolling well.

Enrolling well.

We'll share updates as we get to the end of that. That will allow us to start the 1-year clock and -- but we expect to have a primary top line readout next year, with filing next year.

Right. So sometime next year. Give us a sense of the market for this indication. What does it look like?

So in the U.S., where we have very good data, there's about 300,000 people plus who have -- who are living with a kidney transplant and somewhere around 23,000 people have AMR. And the group -- the subset of those that meet the criteria for this trial that are generally -- have had the transplant for at least 6 months, have donor-specific antibodies that are positive, is about 11,000 people. And we know that pretty well because this is a population that's followed very closely, and there's routine monitoring. People usually don't drop out of care. So it's 11,000 people roughly in the U.S. alone.

Okay. And this can be -- well, first of all, this one study should presumably be enough for an approval?

Correct. So we have breakthrough designation, orphan designation and have the ability to interact with the agency.

And how do the other regulatory agencies around the world feel about this?

Similarly excited. So we are...

But this should be good enough for the Europeans. It should be good enough for the Japanese as well, just as far as...

Yes. We're not running the trial in Japan. The transplantation programs are a little different there, but...

Europe.

Europe, for sure.

But yes, Japan might make you do something with their own patients, right? They like to do that.

Yes, that's okay because we have data in Japanese participants from our IgAN study, so we can do that. Transplantation is a little different. They don't do as much [indiscernible] kidney transplantation where the rates of AMR are higher.

I see. So the market is just completely...

So the numbers of people who are living with a kidney transplant are much smaller.

Right. Okay. So it's 11,000 that are right now and is that a growing?

That's a growing number. So there's over 100,000 people on the waitlist for kidney transplant. It is the preferred treatment for kidney failure. People can survive on dialysis, but the 5-year survival is 20%. So people don't do well on dialysis versus transplantation can prolong life to almost near age equivalent. So that will continue to grow.

So what's the competition look like? What's the standard of care, what are people doing?

So the standard of care is really anchored on this idea that this older idea that donor-specific antibodies drive the disease. And so nothing is approved, but people have essentially developed a routine of trying to extract the antibodies through plasmapheresis or interfere with their activity through administering routine scheduled intravenous immunoglobulin. Neither of those are really effective in reversing AMR, but it's all people have. So they're sort of -- they're used in practice.

And I think the evolution will be now that there's a potential therapy like a targeted therapy like CD38, that will change. The other therapies in the pipeline are really focused around complement. So there's a C1s inhibitor. There's -- Alexion has their own targeted complement inhibitor. But these are -- these, we think, are downstream from the pathogenesis of AMR, where targeted CD38 therapies deplete not only the autoantibody-producing cells or the alloantibody-producing cells in this case, but they also remove natural killer cells, which also express CD38 and are the drivers of this disease. And that's sort of a newly recognized part of the pathogenesis that our studies helped elucidate.

So we're going to talk about the other indications in a second. But when you think about them, is this the indication that has the least amount of so-called competition, probably?

I think so.

The one where you're probably the leader if it executes on the study.

We believe so. The other studies that are out there are in Phase II. And so us being in Phase III, I think we've got a good lead.

Yes. And they're complement inhibitors, too. So completely different.

Completely different.

Technology. Interesting. And the pricing for this product?

So we haven't gone into details about it, but just if you took a back of the envelope calculation, current IgAN pricing as an analog for a rare kidney indication, somewhere north of $200,000, just approximately you could do the math, but essentially, for an indication with a defined population of 11,000 people, that's over a $2 billion market. Like you said...

You get half of them, you've got a $1 billion indication.

Exactly. And the goal is to continue to suppress the AMR activity in those who we can treat, the prevalent patients we can treat and there'll be new incident patients along the way.

Yes. So just to say to me, like this seems like the one where you can check the box and feel the best about the opportunity in addition to it's probably going to work.

Yes. And what we're really excited about is what we hear from patients and clinicians. It really has restored hope for a lot of people, losing an allograft once you've got this lease on life that helps you avoid dialysis is devastating for patients. So we're very excited about that.

Good. Okay. So that's AMR. Where do we go next? IgAN?

Well, before we leave AMR, we'll talk about MVI rule.

Yes, yes, let's do that.

That's...

I like that indication.

A newer recognized indication. It stands for Microvascular Inflammation. And again, with the Nature Medicine paper we published last year based on the Phase II studies, we showed that NK cells were directly responsible for this AMR pathogenesis. And MVI is a newer entity where the donor-specific antibodies are negative. They can be negative for a variety of reasons. They haven't met the threshold yet of being positive. It's earlier in the phase of developing full-blown AMR with DSA positivity. And a really nice epidemiologic study was published late 2024 in the New England Journal that was from a number of international registries, and they looked at the outcomes of people who have this MVI, which was identified with an updated classification of that Banff criteria that I mentioned.

The 2022 classification included specific criteria for this group of patients because there was growing recognition that their outcomes were almost as bad. And that's what this very nice EPI study showed that they have graft loss rates almost as bad as DSA-positive AMR. The size of that population in the U.S. is about 5,000 patients. So again, the opportunity to have an impact in a large number of people.

And so the plan is what...

So the plan is we started a Phase II study. We've enrolled the first participant this month. Very excited about that. It's going to be at the same centers that we're running the Phase III. So we've got some synergies and efficiencies there. And that's a Phase II study that will potentially be registrational enabling that we're excited about.

It could be pivotal. Interesting. And so how many patients did you say in that study?

That one has 81 patients.

Okay. The other one was like 120...

100.

Slightly smaller.

Slightly smaller.

Okay. Very good. And the pricing on this indication would mesh with the other indication, you think?

Yes. So AMR, we expect that people will require ongoing dosing. And so that's sort of the context for AMR. IgAN, which is probably the next indication we can talk about a little different, larger population, a lot of other therapies and some competition. But what we saw in our Phase II IGNAZ study that was published, the people who received the 9-dose course over 5 months then didn't require -- didn't -- weren't given treatment again through 2 years, and they had durable efficacy from the 9-month assessment of reduction in proteinuria all the way out to 2 years off treatment. And that provides a really compelling additional therapeutic opportunity for patients. The pathogenesis makes sense. So rather than suppressing the maturation of the B cells into these professional antibody-producing cells, the plasma cells, plasma blasts, felzartamab depletes them. And so it gets rid of them entirely until they reform either from maturing from memory B cells or there's a new activation of that person's disease that puts them there.

So let's talk about IgAN a little bit. So what kind of proof of concept do you have so far?

So the Phase II study was a modestly small, so 54 participants across 4 dosing arms and an additional Japanese cohort. So the 4 doses were placebo, 2 doses over 2 weeks, 5 doses over 2 months and 9 doses over 5 months. And then a Japanese cohort that got the 9-dose regimen was followed up to only 1 year. But the other participants, we have 2-year data on. And when we look at the results, what we see is, again, about a 50% reduction, placebo-adjusted reduction in proteinuria, which is on par with the other therapies that are out there with durable effects out to 2 years, no suggestion that they're going to increase.

We saw a very good safety. We saw a pattern of immunoglobulin decrease that's different than some of the other therapies out there. We see modest drops in immunoglobulin G, total IgG with return to normal a few months after dosing. So that gave us confidence that in the long term, this could be really potentially differentiated. We have the ability to not treat chronically. We don't interfere with the earlier B cells. So we also showed during our Phase II study that was run during COVID that people would mount the normal immune response to COVID vaccinations, for example. And this is important because some -- there's obviously all sorts of risk that people might be susceptible to with chronic therapy.

So talk about the competitive market, what's it look like?

I think there's 3 buckets of therapies out there. The first is sort of the foundational class of therapies that really treats the injury that exists. So there are CKD therapies that generically will help minimize the decline in kidney function, but not be disease-modifying. So that's the SGLT2 inhibitors, ERAs, MRAs on top of ACE inhibitors. The next group is a group of therapies that can help treat active inflammation driven by complement. So complement gets activated because of immune complex deposition in the kidneys. Those immune complexes are formed by the galactose-deficient IgA1 that is the hallmark of the disease and the autoantibodies to it that plug up the kidney filtering units and cause inflammation.

But if you stop the production of those abnormal antibodies and the autoantibodies, then you presumably will have fewer immune complexes and potentially not have the need for a complement inhibitor. So that's the benefit of the last group of therapies, the ones that essentially are probably disease-modifying that include the APRIL BAFFs as well as the CD38 therapies. In the APRIL BAFFs, there's a lot of them. They have different features and -- but they're all looking to have about the same efficacy and safety, but they require chronic administration as soon as you stop dosing them. It's very clear that within 3 to 4 months, you have a return of your proteinuria and other markers of active disease.

Interesting. Okay. All right. So the Phase III...

Phase III is underway.

Underway.

Global study going very well. I think that helps us see the enthusiasm and opportunity that patients have.

And it's the same endpoint, just remind us.

So yes, similar design as all the others. So randomization, 1:1, felzartamab 9 doses over placebo. People followed out to 2 years with a 9-month interim analysis based on proteinuria. We also have a small subcohort of people with lower levels of kidney function that we're interested in studying. Those people have GFRs between 20 and 30.

Got it. Okay. Good. Next indication should we...

Next, we'll go back to PMN.

I was going to say let's go back to the start. Yes, let's go over.

So Primary Membranous Nephropathy, again, quintessential autoantibody-driven disease. And what we saw in our Phase I/II proof-of-concept studies was that the 9-dose regimen of felza rapidly depleted this pathogenic autoantibody, PLA2R. The population we studied were high risk, so they had high levels of this autoantibody. And then that led to kind of a deepening over time even past the interval of therapy. And so that, again, consistent with this idea that if you deplete the cells that are causing the disease, you can get durable efficacy.

We did see heterogeneity there, and we did see some people have return of the pathogenic autoantibody close to 1 year. And so our Phase III design, we took some lessons from the data we had, which was only up to 1 year. And we have essentially a trial that includes 180 participants randomized to felzartamab or active treatment tacrolimus, and we'll talk about where that fits in the constellation of available therapies. And people who received felzartamab will get the 9-dose course over 5 months at the beginning of year 1 and then again, at the beginning of year 2. And the approvable endpoint in this space is complete remission at 2 years.

The available therapy, so today, there's nothing approved, but there's sort of 3 different therapies that people generally cycle through. The first is anti-CD20s wherever they're available. And those do work in a large number of people, but 20% to 40% of people don't respond initially to therapy and then about 30% actually relapse after maybe an initial response. So that probably reflects the biology that these plasma cells and plasma blasts that produce these pathogenic autoantibodies don't express CD20. And so that fits with this idea that there's really a need for something that actually gets that population of cells. The other therapy that people can respond to is tacrolimus or calcineurin inhibitor, which works through immune and non-immune mechanisms to reduce the proteinuria. But it can't be given too long. Otherwise, it can cause some kidney injury, and so that's a real downside for that therapy. And then the last that generally works, but it can be quite toxic is cyclophosphamide, essentially an antichemotherapeutic agent.

And give us a sense of the size of this population.

So in the U.S., about 36,000 people. So it's sizable. There's, I think, room to sort of say it might make sense in a world where there are available generics for CD20s to see if people respond to that. And then felzartamab, what we've shown is that people who either relapse or don't respond can respond to an anti-CD38. The other patient group upfront that we think could really benefit are those that are really high risk. So people with very high PLA2R titers generally have been unresponsive to anti-CD20 therapy. And so there's this, I think, still a good proportion of patients that would benefit from a targeted CD38.

I didn't ask you, but the other population, the IgAN -- I mean that's over 100,000 patients population.

In the U.S. estimate, you'll see different numbers, but at least 130,000.

Yes. I forgot to ask you, but I think everybody knows that's a really big one. So okay, good. What are some other indications besides those that you're looking?

Yes. So one -- a couple of things that we're working on is we recognize felzartamab in the format that we inherited it, is an IV formulation. We're working on generating a subcu format to optimize patient convenience and get this to as many patients as it might benefit. We don't want that to be a limitation. The other is that I think we really believe in this target and are working on a next-generation anti-CD38 as well. And the goal for that is that it really would help us expand beyond this initial set of indications.

You and I previously have spoken about how the original people who developed this molecule as well as the HI-Bio team that licensed it recognize that over time, out of desperation, a lot of clinicians have used anti-CD38 therapies that are available for myeloma off-label to treat very challenging patients with autoimmune diseases. And so there's an entire series of autoantibody-driven diseases that there's case reports or controlled trials for using available anti-CD38s off-label to show essentially proof of concept, some safety and kind of gives us a road map for other indications where there may be an opportunity.

Like what? Like what do you think?

There's a number of dermatologic, neurologic, rheumatologic disorders. And yes, we're planning to actually start 2 POCs this year in a few additional indications and look forward to sharing that when we get it.

Still don't want to talk about it yet. Okay. Fair enough. What else? What else should we talk about in the last 3 minutes? We kind of went through all of that. What else is kind of happening at the West Coast Hub? And what other areas are you involved in?

Yes, working very closely with the research team and thinking of ways that anti-CD38 might be paired either in combinations or sequential therapy for some of the new immunology indications we're going after. So there's a lot of work there and working with them closely to help build out our immunology portfolio that's becoming quite exciting.

Are you involved like with the lupus studies as well?

We're not directly involved. We've got enough stuff to do. We -- although we've grown as a team, we're still much smaller than the development team that has been working on this for a very long time. And yes, they're...

I was just thinking any of these overlap with that at all?

No.

Partially. I mean, they all seem a little different.

Yes. No, quite different. So I think the one thing to recognize is that the -- people might say, well, you're looking at a lot of different indications, how are you going to get this to patients? What's the commercial build going to be like? I think if we just take AMR first, there's roughly 250 transplant centers in the U.S. But really, most of the patients, probably north of 80% are followed at 50 to 100 of those centers. So that's not an unreasonable place to start. And many of those centers are specialized centers that also have the type of specialized glomerular disease clinics where difficult to treat IgAN patients and PMN patients are going to be.

So it provides a nice foundation to build out further. As we think about the rare kidney indications, IgAN, PMN, there's about 10,000 nephrologists in the U.S., probably 5,000 are actively treating people with glomerular disease. But what's happening in the space is that because of a number of new therapies in development, the community is recognizing there probably needs to be glomerular disease centers of excellence, which might sort of shrink that number even further by the time we get to the launches of IgAN and PMN.

Interesting. And that's happening kind of behind the scenes right now.

That's happening in the community organically because you want clinicians who are comfortable helping patients get on the best therapy for them. And if you don't use these therapies enough, you may not be familiar with some of the advantages or disadvantages.

Yes, there's been a lot of consolidation in the doctors' practices of nephrology. I've seen a lot of private equity kind of roll up a lot of industries. I didn't know if nephrology was one of them.

Nephrology is trifurcated. There's kidney transplant specialists. There's just general CKD docs take care of patients inpatient or outpatient. And then there's some who focus on dialysis. And then there's obviously people who wear all 3 hats or 2 of the 3 or 1 of the 3. And there's been -- obviously, there's always been large consolidation on the dialysis side. 80% of the market is controlled by 2 groups.

Certainly on the dialysis.

But on the provider side, generally, there are larger practices. There's strength in numbers. And because of that, a lot of these larger practices will identify one or a few people to focus on glomerular disease, for example.

Yes. Good. Anything in our last 30 seconds that we didn't hit on that you want to say or.

No. Thanks for the update.