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. Yeah. Really appreciate the time. I just thought we'd maybe start big picture here. The company's been very active reshaping the business under your tenure over the last several years. One area you've been pretty active on is the business development front, including the recent Apellis acquisition. 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 programs, very little diversification, and actually quite a narrow pipeline. In fact, when I first arrived at Biogen, the only physicians we actually called on were neurologists. 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. 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 and Alzheimer's, a little bit in Huntington's. 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, so immunology felt like a logical place for us to go. 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 and 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, these are complement inhibitors, and so also in immunology. Immunology is obviously a vast area. Today we're pretty much focused on 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 eight product launches, eight indications with five molecules. And I think with Apellis, we have the potential to really have an inflection in our revenue growth. So as I look at capital allocation, we're collectively more focused on our early-stage development. We think we can grow this business with what we have. 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. Yeah. Okay, great. Which is also the most capital-effective time to do acquisitions. Yep. And what's the market dynamic right now for those kind of assets? 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 the underlying disease biology is pretty well defined, so there are some areas of this that are highly competitive. At the same time, we have China coming in, so the supply, if you like, of early-stage assets has expanded significantly. Yeah. Okay, great. Maybe before we talk about some of the other therapeutic areas and the diversification, 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 current market dynamics, how to think about steady state market share, and then the subq induction launch, which I know has been a near-term focus. 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. Part of that is really just the enormous change that has had to take place within a neurology practice. This is really requiring a team approach, which neurologists haven't really had to do. They have to organize PET scans and MRIs and infusion beds, do the cognitive assessment. They've had to expand the staff, and before they expanded the staff, was there really 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 two or four weeks? Or do they have a caregiver that can take time off work regularly to do that? So one of the things that we have been really focusing on is how do we simplify that care pathway. I think we made a lot of progress on that, and I think we could potentially see an inflection now in LEQEMBI sales, both in terms of market share as well as in overall market growth. 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 it's 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 diagnostic is less than $130. 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. So the yield, if you like, of eligible patients getting in went from 50% to 70%. Now the last stage has really been the approval of a subcutaneous form. We had that for the maintenance indication last year, and now this year we've had it for induction. 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 two weeks. When you have a subcutaneous, that goes away, and Lilly does not have a subcutaneous for donanemab. 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 January 1st. So we're not going to really see the uptake of subcutaneous in any meaningful way until we get that Part D reimbursement. Yeah. But you are seeing medical exceptions get processed, right? As I remember from the 2Q call. 80%, I think, or better of all medical formulary exemptions that are requested are approved. Yep. Okay. January 1st, you're confident in that timeline? Because I think that was a question we got recently, was could that slip even further, or you're fairly confident January 1st you're going to have Part D access? Well, Medicare makes all its decisions effective 1st of January, so that won't slip. What we don't know is there'll 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 timeframe. We'll have to wait and see which plans reimburse for both indications or at all. But I think we are hopeful that we can get decent reimbursement on January 1st. Okay. Would we know for sure by your third quarter call, again, 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. It might slip a bit. Okay. That's all in the hands of the plans. Yep. They have to get everybody to sign up for these plans in the fall. It's usually in and around that timeframe. Okay. Great. There are two other focal points in terms of Alzheimer's. Roche has a Brainshuttle approach that they're using, which it looks like could potentially lead to lower rates of ARIA. 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 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? I think that right now, I think it is these two 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. I think what you're going to see is actually a lot's 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-ALZ 3, I think it is, 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. Actually, the level of efficacy of these drugs is wonderful. I mean, we clear the amyloid plaques. The question has always been for whom 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. In fact, we demonstrated from a study of low tau patients, and that's really a marker of early-stage patients. In those, 70% of patients were stable on disease over six months, no further decline. 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 tauopathy. Because it's really the tau that determines the severity of the disease. So AHEAD 3 will look at the hypothesis, well, if you can stop the amyloid buildup above a certain threshold, you may never get Alzheimer's. AHEAD 45 is looking at those patients who 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 of something else or lives longer, or maybe also never gets the disease? Then of course, we have tau coming along with diranersen. There's going to be a whole interplay of where's amyloid and tau. 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 causes the ARIA. But if you are an early-stage patient, there is at least a hypothesis that ARIA may not play a role anyway. So certainly at Biogen, we plan to be in both these areas. We are looking at the next generation of Aβ. We are right now in the lead on tau. I think you will 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. For sure. You mentioned, I think Lilly is 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 do not really know how fast Alzheimer's really develops. So even if you retard the growth of amyloid beta, how long does it take to really show a difference? So we have four years that we are looking at. So you have to wait the four years basically. This study started in 2020, and it will read out in 2028. That is one reason why we also decided to diversify the portfolio of the company. We cannot be doing studies like that all the time. Last one before we go to the lupus portfolio is just is a positive readout from TRAILBLAZER-ALZ 3 good for AHEAD 3-45, and is the converse also true, or are there differences that limit read-across potential? Because again, before your data, everyone's going to be focused on Lilly's data, and what does it mean for Biogen and Eisai's 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. 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 two studies, and then you are running also a CLE study that's going to have data in the first half of 2027. So maybe first just help us set expectations for the two SLE studies that are coming out here in the fourth quarter. 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? This is, first of all, a very heterogeneous disease. There are some specialists who 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. So trying to find an endpoint that covers all of those things. The other is that people 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. 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, one of its phase III did not work, and that was largely related to the use of NSAIDs, I think it was, in the group. 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. This also can be a heterogeneous disease. It is something that you treat over longer periods of time. One of the things that is coming out of market research, for instance, now, because this is a market that should be the same size as MS, but it is not today. One of the problems has been the penetration of the biologics. It is not really so much just the fault of the biologics. It is if you are 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 has been a reluctance to use the biologics because they have only got two. Our belief is that as physicians have more treatment options, first of all, that market will grow. A lot of this is going to be which drug is right for this patient at which time. 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. Again, this is an area where we have a lot of experience, not only in MS, but also in postpartum depression. That requires a different outreach. 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. From a commercial point of view, I think Biogen is uniquely positioned to really try to build this market. Then, of course, we have the cutaneous lupus coming in Q1 of the next year, or first half of next year, I think it is. Yeah. What do you think about, I guess SAPHNELO is a precedent, one positive study, one negative study. Do you feel pretty comfortable that even if you had a similar result, you would 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. You also have CLE, so you have multiple shots on goal here. Yep. You mentioned CLE. I think phase III obviously is next year, but I think there is going to be some one-year data at a European conference coming up here later this year. Anything we should focus on in that data set as we think ahead to the phase III data next year? Well, cutaneous lupus is an interesting one to study. First of all, nobody has been actually approved yet in just cutaneous lupus. The distinction is really a function of which physician is looking at it, because you do have patients with SLE that have some skin engagement. Where there is 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 are going to have to see rheumatologists for SLE, but there might be some cutaneous there too. Certainly when you go to the dermatologist, then the cutaneous lupus is more predominant. That is single organ engagement, and it is also very visible like many other dermatological conditions. I think the read-through on a phase II should be, although, given recent events, you cannot be sure of any phase III, but I think there is a reasonable expectation that there is a high probability of read-through. Okay. 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 an end of this year into 2027 dynamic as you build out the lupus sales force and footprint there? We have started already. Really starting on the medical affairs functions. We have been busy building out that 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. In lupus, I think we still have some people involved in multiple sclerosis, and we think we might be able to move some of those. Particularly in the U.S., we might be able to utilize some of the same people for lupus. Yep. Maybe just remind us, I think you framed the opportunity as an $8 billion market for lupus. Is that? Worldwide, yeah. If I look at the I think the MS market is $25 billion or $30 billion. If you look at the actual epidemiology, it is that size. Nobody is really jumping to that number yet because it is going to take some time to really get the penetration of the biologics. I think we look at this as much as a market growth opportunity as a market share. There are so many patients and it is so heterogeneous. I am not really too worried about the competitive dynamics because it is going to be which patient for which drug, and it is exactly the same dynamic we saw in multiple sclerosis. The other is that we are going to have multiple shots on goal on this. We have litifilimab, but we are also partnered with UCB on dapirolizumab, which has already demonstrated one positive phase III, complementary mechanisms of action. We have an IRAK4 degrader that has entered the clinic. 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 will pivot over to one of your other late-stage pipeline assets, felzartamab. This is a pretty interesting asset you got from HI-Bio, trial ongoing in AMR. We are going to have data in the first half of next year. I know you had some pretty strong phase II data that were generated, so maybe just help us think through, again, what is the bar for success here as we look ahead to this next key readout after lupus? Yeah. Maybe before we zoom in, just on a macro level, 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 are essentially following a biological pathway, a cascade of the immune system. That can lead to multiple different indications. On the one hand, that is highly capital efficient because once you have established the safety in one indication, then you can rapidly go into other indications. The tricky part of that is that you are 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. Here we are talking also about an asset with multiple indications. Initially, the first four 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. We also are looking at two non-kidney indications and initiating clinical trials in those. We have a follow-up to that with the CD38. 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. You need your immune system, and generally what we're trying to do is tamp down the immune system. But when you do that, you potentially expose people to opportunistic infections, for example. If you take CD20, great B-cell depletion, but hey, you need those B-cells sometimes. The CD38 is really precision immunology. We're going really after two things. One is the plasma cells that produce the autoantibodies, but we also have these natural killer cells or NK cells. 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. 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 nine infusions, and then we're 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 rejection. 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 four kidney transplants. 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. The other interesting thing about this molecule versus even some other CD38s is that we're not really agonizing the complement immune system as some do. If you're already trying to fight an autoimmune, you don't want to fire up another part of the immune system. That seems to be unique to this molecule. If you look at the pricing, most recent pricing in IgAN, if you just took the IgAN pricing, there's about a $3 billion-$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. The opportunity in AMR could even actually be even bigger. We'll have data for that in the first half of next year as well. Yeah. How do guidelines work at transplant centers? How important are those as you think about the rollout of this product? As you said, 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. Do 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. We're actually already seeing the nephrologist. There isn't a complete overlap between EMPAVELI and AMR, but there are also EMPAVELI patients in some of the transplant centers. So we know where all of those folks are. 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. Yeah. 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 direct read-through to those, or are there nuances? How do you think about likelihood of success of the kidney indications in the event that the AMR data are positive? Yeah. So I think actually, while there'll be a read-through, we think should be a read-through for MVI, although again, MVI is. There's two things that could drive the rejection. One is the donor-specific antibody that you inherited with the transplanted kidney, but there's also your own immune system. MVI is really your own immune system. So there should really be a high probability of success. Again, science 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 a 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 of the drugs that these patients are taking. I have been in this business a long time and done a lot of market research. People define good health as being, I am not taking any medications. 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 have eGFR that could play a role, and we will have to make sure that we are competitive in that space. But I think it is really going to be not just the convenience, but the psychological benefit of saying, "Hey, I think I have beat this thing. Yeah. 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 how to think about EMPAVELI growth, but also SYFOVRE here, as those are the two key commercial assets you also brought in-house. I think you guys have got it to mid to high teens growth. Should we expect that to continue into next year? Yeah. There were a number of drivers for this. We were always upfront about being intentional about doing M&A. Our MS portfolio has been very resilient, but it is clearly not, other than VUMERITY, which still has exclusivity, and which we are still investing and seeing growth in. It has been a declining business. LEQEMBI did not initially take up the slack, although with LEQEMBI, but also with SKYCLARYS, and with ZURZUVAE and QALSODY, our growth brands are now at least outpacing the decline in the MS business. But we have been more or less flat over the last three 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 are not immediately profitable. It is just not healthy for an organization not to grow. You need growth in a company. It really is what drives a lot of the energy, but it also drives discipline and most of your metrics work best when there is growth. So we did need to get back to growth faster, but we did not want to just buy the growth. We wanted 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 is a single molecule that is in kidney, it is in a rare blood disease, and it is also in eye disease. That is very much in line with what we are trying to do. All of these products are early in their growth cycle. All of these have intellectual property protection for quite some time. SYFOVRE, 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. I think you saw in the second quarter that actually, if anything, growth actually accelerated a little bit after the acquisition. 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 mid-single-digit growth. The company wasn't valued on that basis. Investors were a lot more pessimistic. If anything, I would say we're actually a little more optimistic than when we acquired the company on SYFOVRE. It still is 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. EMPAVELI gets us into the nephrology office. If we hadn't done that, we'd have still invested in medical affairs, but we wouldn't have had a commercial team until we actually got approval for a product. Today when we go to a— we were in a nephrology congress and it just happened that the Biogen booth was right next to the EMPAVELI booth. We could literally just do a geographic integration right there at the congress, and that makes a difference. You have different interactions, and 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. You can't underestimate that. The neurologist is different than the oncologist, is different than the cardiologist and the nephrologist. This gives us the ability to understand how nephrologists work, how their practices operate, build those relationships of trust. 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.