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<p>Biogen ranks 28 on this year’s Fortune 100 Best Companies to Work For – Europe list.</p>

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<p>Biogen’s mission is to develop treatments for complicated neurological and immunological diseases, like Alzheimer’s and ALS (Lou Gehrig’s disease). These conditions are often life-altering, and affect billions around the world. It also focuses on rarer conditions that have been largely neglected by Big Pharma. Among Biogen’s recent approvals: the first oral drug to treat postpartum depression, and a treatment for a genetic mutation linked to ALS.</p>

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Industries included in the sector are insurance and managed care, medical products and facilities, pharmacy services, and pharmaceutical companies.

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The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

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F500-2021-228-Biogen

Based in Cambridge, Mass., the biotech specializes in the development and delivery of treatments for neurological diseases. Biogen has developed medications for multiple sclerosis, plaque psoriasis, spinal muscular atrophy, and leukemia, and has research programs focused on neuroimmunology, Alzheimer’s disease and dementia, neuromuscular disorders, and neuropathic pain.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-223-Biogen

The biotechnology company discovers and manufactures treatments for neurological and neurodegenerative diseases. It has recently garnered attention for its experimental Alzheimer’s drug, aducanumab.

This year's Fortune 500 marks the 65th running of the list.

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This year's Fastest-Growing Companies marks the 19th running of the list. In our annual list of public companies with the most stellar three-year profit, revenue, and stock growth, Facebook makes its first appearance.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Biogen develops and manufactures pharmaceutical drugs that treat neurological and neurodegenerative diseases. The company, founded in 1978, has historically been among the leaders in therapies geared toward multiple sclerosis patients. The drugmaker also operates in other areas, such as the treatment of Alzheimer’s, where it has co-developed the FDA-approved drug Leqembi designed to slow the progression of the disease.

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Biogen (BIIB): Company Profile, Stock Price, News, Rankings

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Biogen

biogen

Good morning. My name is Jennifer, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Biogen Fourth Quarter and Full Year twenty twenty four Earnings Call and Business Update. All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question and answer session. Session. 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, Jennifer, and good morning, and welcome to Biogen's fourth quarter and full year twenty twenty four earnings call. During this call, we'll make forward looking statements, which involve risks and uncertainties that may cause actual results to differ materially from our forward looking statements. We provide a comprehensive list of risk factors in our SEC filings, which I encourage you to review. Our earnings release and other documents related to our results as well as reconciliations between GAAP and non GAAP results discussed on this call can be found in the Investors section of biogen.com. We've also posted slides to our website that we will be using during the call.

On today's call, I'm joined by our President and Chief Executive Officer, Chris Vibacker Doctor. Priya Singhal, Head of Development and Mike McDonald, Chief Financial Officer. We'll make some opening comments and then move to Q and A. And to allow us to get through as many questions as possible, we'll kindly ask that you limit yourself to just one question. And with that, I'll hand over to Chris.

Thank you, Tim. Good morning, everybody. Perhaps before we get started, I'd just like to note that this is Mike McDonald's last quarterly presentation as CFO of Biogen. Mike, I believe this is your ninety seventh quarter as a publicly quoted CFO. So congratulations on that amazing career and I'll just take the opportunity to thank you.

You've been a terrific partner and team member and it's been great working with you and we will miss you. And we of course are joined here also by Robin Kramer. I'm also proud to say that we've been able to promote from within. It's a great source of pride that we have that level of talent within the organization. So let's turn to Q4.

As you all know, we have been faced with increased competition for our multiple sclerosis franchise. And really all of our priorities are thinking about how do we now build a new Biogen, how do we build a new phase of growth, and we are focused really around three core priorities. The first are clearly the four products that we launched last year in Alzheimer's, Friedreich's ataxia, depression and ALS. Each of those products is not only a first in class, but first disease modifying agent in each of these diseases. Now that's a source of pride in the level of innovation that Biogen is capable of.

But equally from a commercial point of view, this is a significant challenge since the level of education when you're a pioneer in an area is so much greater and we'll come back and talk a little bit more about that. The next is, we have really reprioritized the pipeline. It's certainly been my experience over the years that focusing on a number of key projects is core to business success. And I'm particularly grateful to both Priya Singhal and Jane Grogan because they have both really I think cleaned out the pipeline for development in Priya's case and research in Jane's case. And we are actually excited now by the products that are in there.

We've got a number of key developments that will start reading out in 2026. We think this is a multibillion dollar portfolio and we're probably one of the few companies that can look at a pipeline that could be more than it could be more than our current biopharmaceutical business when it gets to peak sales, if it all obviously comes to market. So if we can go to the oh, and the third point of course is, we have redesigned the company with a reduction of operating expenses, not just saving costs for the sake of cost, but the ability to release resources for investing in growth. And that's what we're continuing to do. We're excited about our pipeline, but we've also freed up an awful lot of cash flow as you'll see later.

And that cash flow we're investing for more substrate in growth. So yes, now Dan, please next slide. So, the race really that we are faced with is seeing the erosion of our multiple sclerosis product revenue. But I'm particularly happy to see in 2024 that the revenue from our launch products really offset the more than offset the decline in our multiple sclerosis product revenue. And indeed when you actually look that total revenue declined by $160,000,000 and you note that contract manufacturing declined by $247,000,000 it meant that really our core pharma business actually grew and that's for the first time in four years.

And that's really what we're all about in the near term is trying to make sure that the revenue can exceed the multiple sclerosis product decline. Multiple sclerosis product decline is obviously driven by a number of factors going forward, including the timing of TESABRI biosimilar in The U. S. And timing of TECFIDERA generics in Europe. Go to the next slide please, Dan.

So as I said, we've got actually four very innovative pioneering products. Lekambi will come on and talk about in some detail. Skyclaris and Friedreich's ataxia, again, very first treatment for Friedreich's ataxia. We have been able to determine from basically medical claims data that there are approximately four thousand eight hundred patients in The U. S.

That's about what we thought. One of the complexities is that it's harder to find these patients because you could have a primary care physician in a rural setting that has one single patient and you have to go find them. And we're talking to primary care physicians, talking to cardiologists, talking to pediatricians. So it's quite a large prescriber base for a very narrow patient population. But that of course is the core of what rare diseases are.

I remember years ago when we acquired Genzyme when I was at Sanofi and the marketing folks were saying our marketing strategy is looking for needles and haystacks. And that is exactly what rare disease is all about and it's what Biogen is also very good at. And of course today, we've got a lot more technology, we can use tools such as AI and genetic testing to help find those patients. But by its very nature, it is unfortunately not going to be the nice smooth progression quarter on quarter. That said, we are particularly proud to say that we have been able to double the number of patients on treatment in the past year.

Not all of those are yet being reimbursed. We are able to get a lot of patients on drug and then negotiate with governments, particularly in Europe to get the reimbursement. And once we do that, the patients flip from being free goods patients to actually revenue generating treatments. There's always a bit of a in each country, a number of patients who are diagnosed, who haven't been waiting for treatment and you can get those quite easily. There are a number of older patients who actually have lived with this disease for thirty, forty years and they're the ones we actually have to go hunt for.

We will see another growth driver this year and that we expect to get approval for SkyClaris in Latin America. I was in Brazil last year and there are quite a number of patients in Latin America. So as we started with The U. S, we moved to Europe and then we're moving to South America and indeed areas of The Middle East, we expect to see continued steady growth out of SkyClaris, but again, I can appreciate that it's going to be hard for some of you to model on a quarterly basis. Zuzumet was a very nice launch last year and certainly exceeded our expectations.

One of the things that was different from our expectations was that the main prescriber is actually OBGYN and OBGYN. We had actually been targeting originally high prescribing psychiatrist. We still see some of those, but as you can see 80% of the prescriptions are driven by OBGYNs. This is also an area where you could have potentially more people who have ever prescribed for PPD than you actually have patients. And again, targeting and thinking about multi channel marketing commercial approaches are extremely important.

We have filed in Europe and would hope to see an approval sometime later this year. CalSati is not necessarily a big revenue generator, but this is really a breakthrough treatment in ALS. This is the first time we've been able to demonstrate that neurofilament can really help predict drugs early in development as to whether or not they are likely to work or not. And that allows just the whole research and development in ALS to be accelerated. So, we're particularly proud of that.

The impact on patients is absolutely extraordinary. And so we may not be making a big impact on revenue. We're certainly making a big impact on patients' lives. Go to the next slide please, Dan. Now I showed this slide in JP Morgan and there were several investors who looked at that chart and said, this is not the chart of a small product.

And we've all been in this business and looked at a lot of launch curves and we all know that we like to see an acceleration in the curve. But any curve that goes from bottom left to upper right is in my books good unless we're talking about operating expenses. And this is good steady quarter on quarter progress. We have seen some questions on the ex U. S.

Launch. Clearly, the ex U. S. Launch is contributing more than we have seen in prior launches in other areas. I think part of that is, first, I think Eisai is extremely strong in Asia, and they are leading that launch there.

But second, I think the single payer system removes a lot of the obstacles that we're dealing with in The U. S. When you have a single payer, you're not having to negotiate quite so much on terms of PET scans and MRIs and infusion beds and that has facilitated the progress. And it's as strong in China as it is in Japan, not necessarily patient numbers, but we're seeing very strong growth in China and that is a cash pay market. And those two really demonstration of how people value the importance of Lekimbi.

So we'll go to the next chart please. Now, I talked about some of those obstacles and we certainly see that making this easier for both patients and physicians is going to accelerate the launch. And we have a number of these catalysts. The first one has already been achieved. So we have Lecambi IV maintenance that's now FDA approved.

We now have the first patients who are hitting that eighteen month mark, they've cleared their plaque. But as the data have demonstrated, you've got to stay on treatment otherwise some forms of the plaque actually come back. And we have demonstrated three year data to show that actually staying on treatment patients do better than those who stop treatment. And that's an important message because our competition is actually not able to say that. And so this is also important for the education of the disease.

It's not just about plot clearance, it's about maintaining that clearance. The second is really the introduction of blood based diagnostics. Certainly LabCorp and Quest continue to see rising sales of these diagnostics. What I think will really make a difference is getting FDA approval for some of these diagnostics with an evidence base that will give physicians the confidence to be able to confirm diagnosis without the need for a PET scan or a lumbar puncture. And so again, this is something that could not only facilitate the work of the neurologist, but we might also be able to see this being used increasingly to triage patients.

Something like fifty percent of patients who actually managed to get into a neurologist are actually not eligible for treatment because they're too far advanced in their disease. So if we could actually triage some of these patients, particularly at the primary care level, then we can actually get a higher quotient of patients who visit a neurologist actually being eligible for treatment. The subcutaneous form for maintenance, we would expect now on we have a PDUFA date on August 31. That again will really facilitate the journey both for the patient as well as for the physician, no longer needing the infusion beds and patients can actually take the drug from the comfort of their own home. A major game changer we see as the subcutaneous for initiation, which we expect to have in the first half of next year.

And that obviously would also facilitate that for the same reasons of not having to deal with infusion beds and patients can have that in the comfort of their own home. The AHEAD three forty five study has fully recruited. We expect a readout in 2028. This is a landmark study because this is where we could see the promise of potentially prevention of Alzheimer's. We know that before patients actually exhibit symptoms, they've been accumulating plaques in their brains for many, many years.

And unfortunately, a lot of damage is done already by the time patients actually exhibit symptoms. So if we can get patients earlier, we think that we can actually have even better efficacy. And in fact, Priya is going to show shortly again the low tau patients, which is a marker for earlier stage patients. And there we see dramatically improved efficacy versus just the twenty seven percent on the CDR sum of box that was demonstrated in the CLARITY study. So next slide please.

So those are the four products. Clearly, we're also looking at our pipeline. And I think there are three key areas in this to look at. The first is continued investment and commitment to Alzheimer's. We gather some of the top leading experts in Alzheimer's from around the world.

They are the ones who are telling us one that nobody is really doing so much research in a broad area of modalities as Biogen. But the other is they are extremely excited about the opportunity to reduce tau and the impact that that could have on Alzheimer's. So, Alzheimer's is going to be a core franchise for Biogen for decades to come. We had very positive data on dapirolizumab back in September and we've already initiated the second Phase three, but we also have lidafilumab in both CLE and SLE. So we got a nice lupus portfolio of assets coming along.

I'd remind everybody, yes, people are looking at a lot of potential competitors in Phase one, Phase two. But out of the dozens and dozens and dozens of molecules that entered the clinic, only three molecules have ever demonstrated a positive Phase III result, two are already on the market and dapirolizumab is the third. So, we know that you can get excited about a lot of things, but it's not until you actually see Phase III results that you can really have conviction. But that's a potentially significant market and fits nicely with Biogen because we can take a lot of the learnings from MS and apply that to lupus. And of course, the third area are really these auto antibodies.

We have our anti CD38. We are entering expect to enter into three Phase three trials and three separate indications with antibody mediated resistance, the IGAN, the PMN. And we have very compelling Phase II results here. There are no guarantees anytime in research and development, but I think we feel particularly excited about feldsartumab and the potential that this could have in rare kidney disease. And of course, then we have a whole phase of readouts coming along and I think that will become the story of Biogen as we get increasingly more data and people can gain increasing confidence and excitement, share our excitement in our pipeline.

And so with that, I think I'm going to let's continue the story on R and D, Priya, and I'll turn it over to you.

Thank you, Chris. Biogen's development organization had another very productive quarter. We achieved several important milestones across key strategic areas for the company. I would like to begin with immunology, where in collaboration with UCB, as Chris mentioned, we initiated the second Phase three study for DAPI PEGOLE in SLE. This follows the positive readout of the first Phase three study and sharing of detailed study results as a late breaker at the ACR annual meeting last year.

DAPI PIGOL, as Chris mentioned, is only the third agent with a positive global Phase three study in SLE. Additionally, felzartumab was granted orphan drug designation in The EU for both solid organ transplantation and IgA nephropathy. We believe this designation, which is intended to support development of treatments with significant unmet medical need, underscores the potential for filzartumab to become a meaningful new therapy for serious immune mediated diseases like AMR, IgAN and PMN globally. In rare disease, we continued unlocking new geographies for SkyClaris in Friedreich's ataxia and Qualsodi in SOD1 ALS. Leveraging the results of the Skyclaris positive MOXI trial, we obtained approval in Chile and currently have 13 additional regulatory filings under review.

This includes additional filings in Latin America, where we expect regulatory decisions this year in countries such as Brazil and Argentina as we continue our global rollout. Importantly, we also took significant steps towards expanding the value of key portfolio products for patients. In SMA, regulatory filings for high dose Nucinercel have now been accepted in The U. S. And EU, and we expect an FDA decision in September of this year.

And in Alzheimer's disease, we recently received FDA approval for Lekambi less frequent IV maintenance dosing. This is both a significant step for Lekambi and a meaningful advancement in the evolution of Alzheimer's treatment more broadly. I would like to briefly review why there is an urgency to treat now and why maintenance is important based on Lekambi data that we have obtained to date. First, the CLARITY AD study is unique in that it did not exclude patients based upon tau brain pathology. Therefore, we have placebo controlled clinical trial data across the full early Alzheimer's disease population, including individuals with no and low tau, which represent the earliest stages of AD.

In this population, seventy six percent of patients showed no decline and sixty percent showed clinical improvement at eighteen months as assessed by CDR Summer Boxes. What this means is that in over three fourths of early AD patients, their disease was stabilized and more than half the patients showed improved symptoms when treated with Lekambi. The reason why this is important is that this data suggests that patients treated early in their disease can see a profound benefit, which underscores the importance of initiating treatment early. Furthermore, this data also supports the potential of our ongoing pre symptomatic AHEAD three forty five trial. And now that I've shown you why early treatment initiation is important, let me remind you why the new maintenance IV approval is also very critical.

And that is because data shows that Alzheimer's does not stop after plaque removal. Importantly, prior data from the Lekambi Phase two study and its open label extension show that discontinuation of treatment is associated with re accumulation of Alzheimer's biomarkers, including amyloid plaques and importantly, a reversion back to the placebo rate of clinical decline. With its differentiated mechanism of action, we believe Lekambi is uniquely positioned as it is the only disease modifying therapy in Alzheimer's today to show additional benefit with continued treatment after plaque reduction. As you can see from this slide, the three year data from the CLARITY AD study and its open label extension support the potential for long term benefit to patients by showing that continued Lekemv treatment resulted in a doubling of the clinical benefit observed at eighteen months as compared to a matched natural history cohort. With these findings in mind, we are working with Eisai to deliver additional options for patients with the aim of maximizing both the convenience and the clinical benefit of Lekambi.

This includes a subcutaneous formulation with the potential for at home administration to further add to patient optionality and convenience. For subcutaneous maintenance dosing, we now have a PDUFA date of August 2025. Next year in 2026, we aim to introduce subcutaneous dosing for treatment initiation, which we believe will allow even more patients to get started on therapy. And building upon the encouraging results we obtained in the no or low tau population in Clarity AD, we continue to advance evaluating the AHEAD three four five, evaluating, lekembe in individuals who have amyloid plaque pathology in the brain, but before the onset of symptoms, which has the potential to further expand the use of Lekambi. Turning now to the pipeline.

We have previously discussed our efforts to augment our pipeline with the objective of rebalancing the risk profile and investing to win in key areas of expected future growth. As a result, we have focused our development efforts on a smaller set of clinical stage programs that we believe are high conviction and well positioned to deliver a regular cadence of pivotal readouts and potential launches. This includes key late stage programs that have the potential, as you see on this slide, to deliver innovation to benefit patients across Alzheimer's and immunology. We will continue to remain disciplined in our approach as we continue to assess inflection points for our internal development pipeline, but also as we evaluate potential external innovation opportunities that we believe can help support Biogen's goal of sustainable growth. With that, I would now like to hand the call over to Mike for financial updates.

Thank you, Priya. Good morning to everyone. I'd like to begin by providing some highlights from the reported results. Total revenue for the quarter was $2,500,000,000 which represents 3% growth from the fourth quarter of twenty twenty three. Fourth quarter non GAAP diluted EPS was $3.44 and that's 17% higher than the fourth quarter of twenty twenty three.

For the full year of 2024, total revenue of $9,700,000,000 represents a decline of 2% from 2023 consistent with our most recent guidance of a low single digit decline. And full year 2024 non GAAP diluted EPS was $16.47 and that's 12% higher than the full year 2023, also consistent with our most recent guidance range of $6.1 to $16.6 EPS growth and operating income expansion in both the fourth quarter and full year was supported by our fit for growth and R and D prioritization initiatives. We are pleased that this performance allowed us to generate $722,000,000 of free cash flow in the quarter, which brought us to $2,700,000,000 for the full year and that's an improvement of $1,400,000,000 from $1,300,000,000 generated in 2023. Now I'll turn to a few comments on revenue and commercial dynamics from the fourth quarter. Our MS product revenue declined roughly 8% at actual currency and 9% at constant currency as compared to the fourth quarter of twenty twenty three.

And that was driven primarily by competition in the space, partially offset by some seasonal channel dynamics. Interferons continued to be impacted by competition as patients transition to higher efficacy therapies and TECFIDERA continued to be impacted by generic competition globally. Tysabri has seen some impacts from a biosimilar enter in Europe and although a biosimilar has not yet launched in The U. S, we continue to see competition increasing in the high efficacy class. Plumerity saw an increase in demand in the quarter and also benefited from some seasonal channel dynamics.

Next, our rare disease franchise produced revenue of $535,000,000 in the fourth quarter and that represented growth of 13% at actual currency and 15% at constant currency from the fourth quarter of twenty twenty three. Global Skyclaris revenue in the fourth quarter was $102,000,000 an increase of 83 versus the fourth quarter of twenty twenty three with nearly double the number of patients on therapy. U. S. Skyclaris revenue in the fourth quarter was $71,000,000 We continued to add patients in the quarter, but revenue was sequentially impacted by an inventory build in the third quarter that was drawn down in the fourth quarter, as well as some Medicare discount dynamics.

Global SPINRAZA revenue of $421,000,000 in the fourth quarter grew 2% year over year, including growth in The U. S. Of 6% year over year. We are encouraged by the performance here and look forward to a potential future loss launch of the high dose option. DIRZUVAY delivered approximately $23,000,000 of revenue in the quarter and that was driven by an increase in demand, partially offset by channel dynamics.

And we again saw steady sequential growth for Lekkembi with fourth quarter global in market sales booked by Eisai of approximately $87,000,000 and that's up approximately 30% sequentially from the third quarter of twenty twenty four. Lekkembi fourth quarter in market sales in The U. S. Were $50,000,000 and that's up roughly 28% sequentially from the third quarter of twenty twenty four. I'll now turn to a few comments on dynamics from a few key expense lines.

Non GAAP cost of sales as a percentage of revenue improved 300 basis points in the fourth quarter as compared to the fourth quarter of twenty twenty three and that was driven primarily by lower idle capacity charges. Fourth quarter non GAAP core operating expense or R and D plus SG and A expense increased 4% year over year as the benefits from our R and D prioritization and fit for growth initiatives allowed us to mostly absorb incremental spend associated with our launches. Non GAAP other expense was $72,000,000 in the quarter and that was driven primarily by net interest expense. Non GAAP diluted EPS was $3.44 in the fourth quarter, representing growth of 17% versus the fourth quarter of twenty twenty three. Now a brief update on our balance sheet.

We generated $2,700,000,000 of free cash flow in 2024 due to strong operating income. Please note that the timing of certain cash tax payments in 2024 also benefited free cash flow. We ended 2024 with $2,400,000,000 of cash and roughly $3,900,000,000 of net debt and continue to believe that our balance sheet remains strong and allows us to continue to invest in both internal and external growth opportunities. Turning now to our full year 2025 guidance ranges and assumptions. We expect full year 2025 non GAAP diluted earnings per share of between $15.25 and $16.25 This guidance range, which is based upon FX rates on 02/07/2025, includes a $0.35 EPS headwind from foreign exchange when compared to average exchange rates in 2024.

Total revenue for 2025 is expected to decline by a mid single digit percentage. This is driven primarily by an increased decline in our MS business as compared to 2024. The pressure on our MS business is expected to be driven by potential biosimilar entry for Tysabri in The U. S. This year and potential generic entry for TECFIDERA in certain European markets.

We expect this decline to be partially offset by continued strong and increasing revenue growth from our new product launches. Please note this revenue range also includes a roughly 1% headwind from foreign exchange. In 2025, we expect an impact from Medicare Part D redesign at the total company level to be limited approximately $50,000,000 to $100,000,000 We expect approximately one third of this impact to be related to SkyClaris with the remainder coming from MS. On operating expenses, we remain on track to deliver the $1,000,000,000 of gross and $800,000,000 of net savings from our Fit for Growth initiative by the end of this year. With this in mind, we expect full year 2025 combined non GAAP R and D and SG and A expense to total approximately $3,900,000,000 And as it will take time for the savings to crystallize, we expect to see higher OpEx in the beginning of the year.

We expect non GAAP operating margin percentage to remain relatively flat in 2025 as compared to 2024. And on the non operating side of expenses, I would highlight the components of our non GAAP other income and expense line. This line includes interest expense on our debt and some other expenses, partially offset by interest income on our cash balances. For full year 2025, we expect other income expense to be a net expense of approximately $180,000,000 to $220,000,000 And finally, some additional considerations as you think about your models. As has been the case in previous years, we expect the first quarter to be pressured due to seasonality, driven by higher discounts and allowances as well as channel dynamics in The U.

S. And that will mostly impact our MS business. I would also note with regard to Fampura that we terminated the license and collaboration agreement effective 01/01/2025. And as I just mentioned, our current year guidance takes account of the stronger dollar today compared with the same time last year. For modeling purposes, each cent change in the euro versus the U.

S. Dollar impacts revenue by approximately $15,000,000 I would also refer you to the current slide as well as our press release for other important guidance assumptions. And in closing, we welcome Robin Kramer as Biogen's CFO following my retirement later this quarter. This orderly transition plan has been in process for some time now and I have full confidence that Robin will be a great CFO. I'm excited about Biogen's future and will remain a supporter and shareholder of Biogen in the years to come.

And with that, we will now open the call up for questions.

Thanks, Mike. Jennifer, can we go to the first question, please?

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

Good morning. Thanks for taking my question. What is your latest thinking on the capacity preference and potential timelines for external BD? And in terms of your growth outlook, just help us understand the balance between the existing pipeline and the assets you could bring in? Thank you.

Thanks, Alvin. I mean, I think we'll get Mike to give you an update on capacity. As I said, we are very excited about the pipeline that we have. But I think one of the things that we'd like to do is continue to reinforce that pipeline. Over the years, I've come to the conclusion that you can never have enough pipeline.

First element is we've done a major restructuring of research because I think as companies in our industry, it's very expensive to bring in late stage assets. And we would like to have research be our primary source of innovation, obviously internally, but also externally. And so I think we have completely restructured research to create the financial capacity, as well as the talent capacity to do more collaborations and bring assets in particularly pre GLP talks. Beyond that, we are looking at virtually every phase, the early phase development right now. I would say Priya probably would agree with me that our early stage development pipeline is still relatively thin.

And but even if we can find things in Phase III, if it's got a really solid Phase II, I'm not big on taking a lot of risk on Phase III clinical trials because that gets expensive. And in terms of acquisitions, we have been migrating in new areas such as immunology and rare diseases. And if we can find acquisitions that can bolster our positions in that, we will do so. We don't have a particular size that we're looking for. It could be late stage development.

It could be early stage commercial. The one thing it has to do is make financial sense. I think where we are as a company, we don't need to be taking a huge amount of risk on acquisitions. That said, we are always looking, we always have about at least 15 to 20 different projects that we're looking at at any one time. But as you know, you kind of have to look at 100 things before you find something that is of interest.

And Mike, maybe want to talk about capacity?

And Salveen on capacity, the balance sheet remains in excellent shape. As we mentioned in the prepared remarks, we ended the year with $2,400,000,000 of cash on hand. The EBITDA run rate is north of $3,000,000,000 a year. So with $6,300,000,000 of gross debt and $3,900,000,000 of net debt, you're in the zip code of maybe two turns gross and one to 1.5 turns net. And we were very pleased with the free cash flow results this year in 2020 or last year, I should say 2024, dollars '2 point '7 billion.

So that cash balance will continue to grow. So when you look at the modest amount of leverage, the $2,400,000,000 of cash on hand and the growing free cash flow, The balance sheet is in an excellent position. As Chris said, the plan will be to stay very disciplined and only do things that make good financial sense, but we've got significant capacity to do a series of smaller things or perhaps a larger thing if it does make good financial sense.

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

We'll take our next question from Michael Yee with Jefferies.

Thanks. Priya, you mentioned that on the Lekembe slide that one of the important developments is the potential for blood based diagnostics. And my understanding is that that's coming this year. Can you walk through how important that is in terms of any bottlenecks and specifically whether that totally would be able to replace PET or how that actually works since diagnostics are a little bit complicated? Thank you.

Yes. Thanks, Mike. So overall, I think that accurate diagnosis of Alzheimer's disease and confirmation of amyloid remains very important. And it is the entry point for the kind of care pathway here. So it's important.

I think with the advent of the anti amyloid therapies, we've seen amazing momentum there. And as Chris mentioned, we have tests available today that are at triage sort of level. The question here is, what is the what is going to be the availability in the near term for an in vitro diagnostic approved by the FDA that can be used widely and can also be reimbursed and give physicians and neurologists confidence that they can actually trust that outcome and that result versus a pet. And we think that this is likely going to happen in the near term. You know, Fuji Ray Bio is already filed.

We know there are a couple of others like C2N and Roche that are sort of working on these IVDs or in vitro diagnostics. And one was already filed, the Fugitive Biofile last year. We believe that usually the timeframe is about six months. I think the next stage will be generating data so that payers and others are confident that it can adequately represent the Medicare population, which tends to be the broader population. So I think concordance is important as is reimbursement, but we think this is moving really fast and we think we'll see quite a few milestones occur in the near term.

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

The next question comes from Tim Anderson with Bank of America.

Thank you. On your spend guidance, you're saying $3,900,000,000 combined R and D and SG and A, which is about $200,000,000 lower than consensus. Revenues are also a little bit lower than consensus, so it offsets each other. My question is, how much does the royalty pharma deal take out of the R and D line in 2025 specifically? I know it's $250,000,000 in the aggregate that they'll fund, but what's that relief to 2025 R and D?

And then on royalty pharma, can we expect Biogen to do more of these off balance sheet types of transactions with pipeline programs over the next one to two years? Thank you.

So Tim, Mike speaking. On the Royalty Pharma transaction, our current expectation is that the $200,000,000 that we would receive in 2025 from Royalty Pharma would be accounted for as a reduction to R and D expense. So that would be a dollar for dollar reduction that's in the mix of our guidance.

Well, just in terms of other deals, the remuneration to those providing financing is usually through royalties and it's not easy to make work for every product. So, I think at the moment we look at this as a one off transaction, but it is a useful model to take risk off the table and be able to spread the investment across more assets. I mean, it's essentially a way of getting more shots on goal.

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

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

Hey, good morning. Thanks for taking my question.

could you elaborate a little bit more on the dynamics you're seeing in The U. S? Like are there ways to accelerate patient identification to meaningfully grow revenue there? Should we be expecting this to more be an ex U. S.

International growth product? And how big are the hurdles in terms of reimbursement outside The U. S? Thanks.

In The U. S, I think there have been already a number of creative approaches.

is using AI and looking across social media to be able to identify where patients are. As I said before, there's quite a large number of potential prescribers you could go to. The question is how do you zero that down to a geography and a type of physician that makes the visit efficient. And so, let's say we've used the AI. Obviously, as whenever you develop a treatment for a disease, there's a greater interest in diagnosing it.

And so I think one of the things that we're seeing is a much greater use of genetic testing. Genetic testing does have a cost and physicians have not always been interested in using it if it wasn't going to lead to a treatment. But now that Skyclaris is there, we are seeing that increased utilization. The final thing is using multi and omni channel marketing to be able to reach physicians just to educate them about what is Friedreich's ataxia. There are also multiple ataxias out there And so that's where the genetic testing can become important.

But when you listen to the patient journeys, it can take often three, four years before a patient gets a definitive diagnosis. A lot of particularly younger people are just kind of thought to be clumsy for a period of time and then progressively lose mobility. And it takes a while because there are a lot of physicians who've never even heard of as I said Friedwig ataxia. And so that's where the education is needed. I would say today with the technology we have, we have a lot of tools that we didn't have even fifteen years ago, but it is still finding patient by patient.

We look at how many patients we found every week. And then it's the reimbursement isn't really an issue in The U. S. There are hurdles to this is where Biogen is particularly good. We have a very adept group that can help patients navigate the reimbursement system.

In Europe, I don't think we're necessarily seeing any and we're going to find any issues of reimbursement. It's mostly getting through the whole process, presenting the cost effectiveness data. But we are very encouraged by the uptake. And once you have uptake, then that's a good demonstration of the value of the medicine when it comes to discussing things with reimbursing countries. So it will be progressive.

I think there are 10 countries today in Europe which reimburse and every quarter we'll be adding more countries and the same will be true ex Europe and Latin America for example.

We'll go to the next question please, Jennifer.

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

a little more flavor on what's happening with SPINRAZA in The U. S. And The U. S. Just dynamics and how much inventory is mattering and what's happening with pricing?

I'll let Mike take the inventory question. SPINRAZA,

Biogen (BIIB) Q4 2024 Earnings Call Transcript

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