Biogen Inc. (BIIB) Q3 2026 Earnings Call Transcript

Operator: Please stand by. 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 26 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. Star 1 on your telephone keypad. Please limit yourself to 1 question to allow other participants time for questions. If you require any further follow-up, you may press-- Today's conference is being recorded. Thank you. I would now like to turn the conference over to Mr. Tim Head of Investor Relations. Mr. Power, you may begin your conference.

Tim Power: Thanks, Cynthia, good morning, everybody. Welcome to Biogen's third Quarter 26 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 biogencom. We have also posted the slides to our website that we will use during the call. On today's call, I am joined by our President and Chief Executive Officer, Christopher A. Viehbacher Doctor Priya Singhal, Head of Development Robin Kramer, our Chief Financial Officer Alicia Alaimo, president North America, is also available for the Q&A section of the call. He will make some opening comments and we will move to the Q&A session. And to allow us to get through as many questions as possible, we will ask you to kindly limit yourself to just 1 question. And I will now hand the call over to Christopher.

Christopher A. Viehbacher: Alright. Thank you, Tim. Good morning, everybody. Very strong quarter this morning. it is actually 1 of those quarters where the numbers almost just speak for themselves. Total revenue grew 11% year over year. Now, of course, that is not all organic. That was significantly benefited from the acquisition of Appellis. But, you know, I would also say that, I think the acquisition of and the integration of the pellets has gone even better than expected. You know, the integration team has, I think, been able to identify and eliminate cost synergies faster than we thought. Alisha's here, and I have to give Alisha a lot of credit for her leadership in really ensuring that the Palace team has felt welcome within Biogen. And I think, really, the most credit goes to the people from Apollos 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, Appellis has certainly helped us. You know, our industry has embraced bolt on acquisitions the years. But 1 of the things I have learned is you are 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 on a top level. And that is important because when you do an acquisition, there is an inevitable amount of distraction. And if you have got a team that is already performing well, then it cannot 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 have really realized the synergy between the folks from Appellis and who joined the Biogen teams They have come together, and I look at SYFOVRE and Empaveli, you can see 37% year over year growth of 2 hundred and 32 hundred 43 million. that is already on a run rate of $1 billion. And we are on track to realize $250 million of run rate synergies by the end of 27. And in fact, you will see from the guidance that we put out in Robin will detail this more, but we have 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. At an operating level, dilution is already, pretty much negligible. If I look at Biogen's own growth portfolio, $1.26 billion, that is 50% year over year growth. that is now almost getting to 2 thirds of our core pharmaceutical revenue in Q3. And so, this is where the story has been that we have 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, you know, we have really got 3 key priorities here. 1 is to continue to grow that commercial portfolio. And, you know, 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 have said this in the past, it is 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 is going to be extremely important as we turn to the next priority, which is this multiyear registrational data flow. The first point I would make on that is given the Appellis 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 will be able to launch products on top of a growing base. The other I would say is there is going to be a number of areas where we are still in breakthrough. AMR is a market, for instance, that does not exist. MBI is a market that does not exist. In fact, a lot of education is needed. But we are already seeing high levels of awareness on those. We do know how to create and build markets. We are 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 Alicia 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 is no real good reason for that. We have found some insights into that. 1 is that patients will be expected to be treatment from many, many years. And with only 2 approved biologics, physicians tend to conserve those biologics until a patient progresses. And we are 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 and 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 have got phase 3 readouts expected, not only in SLE, but we have got cutaneous lupus, we have got AMR, and our partners at Stoke, we expect to be reporting on ZURZUVAE in and Dravet syndrome. And then the third priority, 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 top leadership at Biogen are spending a lot of our time. Because it is in research and early development that you are building the future of your company. And we were not necessarily very good with that. We had gone 3 years without a single IND. Under the leadership of Adam Keeney 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 have already had 5 INDs this year. As Priya will tell you, Biogen in its 48 years of 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 are already planning for the future. You know, in this business, the day you launch a new product is the day you should be thinking about what product is going to succeed in. And so those are the 3 areas. I think it is it is exciting. The future of Biogen is the forest, and with that, I will I will turn it over to Priya who can give us a little bit more insight to the excitement awaiting us.

Priya Singhal: Thank you, Christopher, and good morning, everyone. Over the past few years, you have heard us talk about the pipeline transformation, as Christopher just mentioned. I would like to take a few minutes to remind you of where we are today. Our new Biogen strategy remains sent around delivering a path to sustainable growth over the long term. And we are pleased by the progress we have made in delivering on that goal. This is an exciting time for Biogen And today, as a result of this strategy, we have built 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 for litifilumab and the TRANSCEND readout for felzartamab in AMR. So reflected on the slide, I am pleased that our upcoming registrational readout cycle remains on track. Starting with our plan disclosure of the 2 phase 3 SLE studies for litifilumab in the first half of December. As we turn beyond that, we expect CLE data from dapirolizumab as well as AMR data from felzartamab, followed by a readout from zorubunursen in Dravet 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 the potential to meaningfully shape our 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 am 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.

Robin C. Kramer: Thank you, Priya. I am pleased to provide an update on another strong quarterly financial performance. Our results reflect the continued momentum in our commercial portfolio, that we have seen throughout this year and Q3 marks the first full quarter with Sifovri and 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 26. The portfolio now represents approximately 63% of our total core pharmaceutical revenue. This quarter's results demonstrate continued strong commercial execution and emphasize the significant progress we have 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 25. We are pleased with the rapid pace of conversion to high dose. Which has exceeded our expectations. We believe the enthusiasm from the patient and prescriber communities is encouraging for the opportunity for salinersen. VUMERITY 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 for VUMERITY to be roughly flat sequentially or up approximately a mid single digit percentage versus the fourth quarter of 25. Beyond that, we believe these dynamics establish a new base from which VUMERITY can grow. LEQEMBI end market revenue, was $22 million up 67% year over year and 10% quarter over quarter, as we have 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 US. 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 are encouraged that at least 50% of covered lives are expected to have coverage in both the initiation and maintenance administrations starting in 2027 which should support iClick adoption as we move into the next year. SKYCLARYS saw patient demand growth both in the US and ex-US. 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 Empaveli, Q3 represents the first full quarter following the close of the Appellis acquisition in May, and the integration has continued to progress well, with both SYFOVRE and Empaveli having another strong performance this quarter. SYFOVRE $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 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 Appellis in the fourth quarter of 25. Empaveli revenue was $52 million which was up 11% quarter over quarter driven by strong demand for the nephrology indication 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 Appellis 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 Apellis operating expenses, as well as continued investment in our Phase III programs litifilimab in SLE and CLE, felzartamab in AMR, zorubunursen in Dravet syndrome, and salinersen in SMA. As well as support for The US 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 in Q3 26. Largely associated with our Baceira 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 charge as I noted. 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 Appellis transaction. As well as restructuring costs related to the Appellis 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 26. 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 Appellis 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 27. Now turning to guidance. As you heard this morning, we have 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 Appellis acquisition, resulting in favorability and 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 $13.00 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 Apellis synergies faster than expected. Our 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 pipe pipeline and prelaunch activities. We also now expect approximately $50 million of acquired IPR&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 remains 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 26 was another strong quarter and a continuation of the momentum we have 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 Appellis acquisition. As we strengthen 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.

Tim Power: Thanks, Robin. Can we go to our first question, please, Cynthia?

Operator: Thank you. You. Your first question comes from the line of Phil Nadeau with TD Cowen.

Phil Nadeau: Good morning. Thanks for taking our question and congrats on the solid quarter. I wanted to ask about the upcoming litifilumab data in SLE. I think that is now becoming a focus of investors Can Biogen discuss its confidence that those Phase III trials will succeed and maybe work into that, the differences in the phase 3 design versus phase 2? Thank you.

Christopher A. Viehbacher: Priya, you want to take that 1?

Priya Singhal: Sure. Thanks, Phil. So I think just stepping back, we recognize and lupus is a very heterogeneous disease. We studied past trials, and we have extensively put several strategies in place to optimize the outcomes. And I have discussed those in the past. And I think just to name a few, the steroid tapering, control of background standard of care meds, So I do not really have anything new to add to those strategies. We remain very close now to data readouts. Both of them being disclosed in the first half of December. So I will just stop there, and we look forward to seeing the data as well.

Tim Power: Thanks, Priya. Let's go to the next question, please.

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

Chris Schott: Great. Thanks so much. Just a question on felzartamab. 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 are 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's modeling this? Do you think The Street's kind of getting this right in terms of how big of an opportunity this could be? Thanks so much.

Christopher A. Viehbacher: Okay.

Alisha Alaimo: Hello, Christopher. This is Alisha. I will take your question. So we have been spending a lot of time looking at AMR and I also think we have been looking a lot at MBI as well, which I will 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 felzartamab's MOA. And it really was incredibly positive conversations. When you look at AMR, we believe there is around 11 thousand patients. And you have to also remember that not all those patients will go on product. Several of those patients will already be too late in their progression but there is a very large cohort that will. Now currently, AMR will be treated in transplant centers, and transplant neph see themselves as stewards of the graft. So the interesting thing about the space is we know exactly who will be treating the patients. it is about getting the patients in there. The 1 thing that we have learned from Empaveli, now that Empaveli has been working with transplant nests, 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 have already hired a medical team that has already visited 100 transplant centers, and they are already looking at how you get on the protocol as quickly as possible once you have an approval. When you look at the ramp, you are gonna have to know a couple of the months out of the gate. You are gonna have some centers that will start right away. You have others that will gradually come on. You are also gonna 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 nephs. General nephs are actually very good at monitoring for AMR. They are also pretty good at already referring them into the transplant centers. So that system, though it is not perfect, is already there. So we know that we will already out of the gate, have a good set of patients at launch, and we are 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 is about educating and understanding the protocols. And how quickly we can get on. And then for general neph, it is 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 have probably seen what is been happening in the market with IgAN. But we do believe that pricing will reflect the significant value that FELD 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 are also going to see, like, what we saw with SPINRAZA, that first year is where you are gonna 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 MVI. Now we view MVI as incremental to AMR rather than a separate commercial market. And now that we have 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 CAMs. Right now, CAMs understand it greatly, but it is currently an underappreciated disease that we have some time to work on, but we have already those conversations.

Tim Power: Thanks very much, Alisha. Can we go to the next 1, please?

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

Brian Abrahams: Hey, good morning. Thanks for taking my question and congrats on the quarter. Maybe another question for Priya on litifilimab. 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 2 study, in particular with respect to interferon gene signatures? Thanks.

Priya Singhal: 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 are not any differences that we are aware of in terms of lilac versus Topaz 1 and 2. On interferon gene signature. We will only know afterwards when we look at the data, and these are areas we will be examining carefully.

Tim Power: Thanks, Priya. Let's go to the next question, please.

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

Umer Raffat: Hi, guys. Thanks for taking my question. 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 the entire delta, this entire separation, versus placebo was driven by sort of 1 subcomponent, which is Sledai-2K. Again, I am sure you are very familiar with that as well. How are you thinking about the relevance of that finding heading into phase 3? Do you still expect it to be Sledai-2k 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 is other companies in the space commenting on that even in a scenario where 1 of the trial does not hit stats?

Priya Singhal: Yep. Thanks, Umer. I think, just stepping back, I think we believe that SRI-4 is the right primary endpoint when we design the trial given that our focus is on skin and joints. And how it kind of measures outcome. So I think from that perspective, we think that is right. Yes. I think we will have the opportunity once we see the data to decide how we might pool 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.

Tim Power: Go to our next question, please.

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

Salveen Richter: Morning. Thanks for taking my question. Could you speak to how much of an increase in commercial injections for SYFOVRE is due to reducing free drug use versus demand and also with regard to the education campaigns, you look to improving the discontinuation rate. Maybe help us understand what is resonating with physicians and patients and where the remaining barriers are. Thank you.

Alisha Alaimo: Hi, 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 is 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, you know, 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 slowing 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 discontinues 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 are not 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 are expecting everything to clear right away. They do not understand the slowing of progression. So when they get the injection, they feel like, oh, that does not work. They do not come back. And so there is an educational piece that we are 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 specialist, they do not actually realize that these patients have dropped off at month 1. 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 gonna be around, I have mentioned this before. You know, now that we have 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, you know, they were in DTC a while ago for SYFOVRE. And, actually, the results of it was very good. You saw a direct impact in the patients going in and requesting the product. And then for whatever reason, they of course stopped it. But now that they are in Biogen, we have decided to kick that back up again. Already have a concept. We shared it with Christopher. We think it will be a very good DTC and we hope to launch that next year, and we do believe we will drive even more patients into doctor's offices.

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

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

Michael Yee: Great. Thank you. Maybe just a question on the cutaneous lupus readout in the first half. Maybe you could just comment, Priya or Christopher, on your confidence in that indication and 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 different than dapirolizumab, for example, and just your overall confidence in that study. I know you are appreciating your reign. 1 study here versus systemic 2 studies. So just wanted to think about how you are framing the cutaneous readout. Thank you.

Priya Singhal: Yep. 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 2 we see that the drug has activity in both forms of the disease. I think just stepping back, it is too close really now, and I do not wanna speculate. So I am not gonna really talk about confidence. We know that systemic lupus is generally more heterogeneous. So I think that is the area that I spoke about earlier as well as to what are the strategies we put in to really address you know, the variability that we see. Moving to cutaneous lupus, this is obviously a visible condition. it is easier to kind of visualize and see impact. So I. I will I will just stop there, but I think overall, we believe both are high unmet needs, and we are gonna see data in both these indications. And we have seen data in phase 2, so we will wait to see what we get in phase 3.

Tim Power: Great. Let's go to the next 1, please.

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

Alex Hammond: Thanks for taking the question. 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 2, does it give you confidence on the commercial dynamic for salinersen assuming a positive Phase 3 result, I think, in 2028? Thank you.

Alisha Alaimo: Thank you, Alex. This is Alisha. We are really pleased with the performance of SPINRAZA high dose. In fact, 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 is actually SPINRAZA high dose. And we do believe this has now set a new bar also for efficacy. You know, the 1 thing about this community that is so special is, number 1, they know every trial that is coming out. They know every physician. And when they want something, they ask for it. So a lot of what you are seeing with SPINRAZA high dose is really coming from the community. Pulling it, and asking doctors for it. And not just in The US, by the way. I wanna say both of the other regions, both Europe and Ex US and Europe we are seeing similar results across the board with SPINRAZA high dose. 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 the product. That means that they have pulled forward quite a few of these patients. And clearly, we are 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 are not as many patients that will be getting that onetime benefit of the $90 thousand that you are 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 are seeing patients come back. So they have been on SPINRAZA They went to a competitor, and then we call that a switchback. So we have seen a portion of patients switching back. We have also seen a portion of patients either being dosed right before their Zolgensma or after Zolgensma. So there is 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 is our goal with SPINRAZA high dose? it is to maintain the patients that we currently have as especially as we approach a potential launch of salinersen. Which I have to say the community already knows about salinersen and patients are already asking about it. So we also believe that will be a very large commercial opportunity for us if we do get an approval for it.

Tim Power: Let's go to our next question, please.

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

Paul Matteis: Hey, great. Thanks I wanted to throw 1 in on ZURZUVAE ahead of data next year. Can you talk about the work you have done to garner conviction in pricing that drug at a premium? Outside of The US 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 effects on cognition in the phase 3 drive a study. Thanks so much.

Christopher A. Viehbacher: Yeah. Paul, I think the, there is an opportunity to reprice this market, and the real differentiation is the impact on cognition as you said. So, as we. I think we have already talked about that this is a an addressable market of at least $1 billion outside the US. And, you know, obviously, we need to see the phase 3 results. But I think if they replicate the phase 2, then I do think we have a pretty, compelling proposition to take to payers in Europe.

Tim Power: Yes. Let's go to the next question, please, Sofia.

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

Evan Seigerman: Congrats on the really nice progress. I want to touch on the LAKEMBY and LEQEMBI IQLIK just given the growth we are seeing there. You know, in the field, what is the feedback from both patients and providers regarding iClick You know, are they real. 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 so much.

Alisha Alaimo: Hey. Thank you, Evan. This is Alisha. Very excited that you asked about LEQEMBI iClick. I think first, I would like to address, if you do not mind, part d because those are the questions we had quite a bit over the last couple quarters. And if you have been able to look at the published formularies already, you are gonna see that Part D, as Robin had also mentioned, we have at least 50% coverage, which I have to say during this time, especially, you know, post IRA Part D plans have been quite restrictive. So we are very pleased with where we are with Part D. Also, keep in mind, it is an open enrollment right now, so I cannot actually tell you the total lives because 30% are still in flux. So even though we know 50% now, we do believe that we will have greater than 50% 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 are gonna see is it is re. 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 have 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 DDD data, which I know many of you buy, it does not have a great cap rate. It is going to show really astronomical numbers for how they capture it. I would say, you know, do not look at iClickEye for the DVD data. But when you do look at how it is performing in market, and you compare it to, let's say, the LEQEMBI IV launcher Kasunla, iClick I is outpacing the LEQEMBI IV launch by 3.5x and Kasunla by 6x. Now these are early days, and so you are going to see that some of that is going to be, you know, orders going into certain IDNs and maybe some bolus of patients. However, the interesting thing that we are seeing that we have not seen before iClick, of course, the majority you are gonna see come from LEQEMBI writers and all dual writers, but we are now seeing writers who had never written an AAT before, never written KISS, never wrote Lek IV. They are writing ICLIK. We are also seeing physicians who have only ever written QALSODY write iClick. And so you are starting to see a dynamic change, especially in areas where there is long drive times. For example, you know, the fastest uptake that we have is on the West Coast, where you are seeing really a lot of space and geography, and you are also seeing the convenience fact happen as well. And so with that being said, I think that this year, right now, it is outpacing what our plans were. It is early days. And as you look at next year, I think that we are 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 an AAT before, it is a very good signal to us that this can be very promising for next year and the years beyond.

Tim Power: Thanks, Alisha. Could we go to the next question, please?

Operator: Your next question comes from the line of Jeff Meacham with Citi.

Geoffrey Meacham: Good morning, guys. Thanks for the question. Bigger picture 1 for Christopher. 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 felzartamab development, for example, more commercial investment investments in SYFOVRE or staying aggressive in BD. Just want to get the kind of internal external balance from you, looking forward. Thank you.

Christopher A. Viehbacher: Yeah. Thanks. Well, there is no question that is you know, if obviously we have to wait till the clinical trial results, but we are looking at these 10 Phase III launches. there is 5 NME launches Now part of the rationale, remember, for acquiring Appellis was already to acquire a commercial team for felzartamab. Now that does not mean we would not want to expand that. Further, but, you know, it is it is not gonna be a you know, we are starting from scratch type investment in that space. Lupus, I would suspect, is gonna need a lot of investment. A lot of education. ZURZUVAE and ursine, I think, is really a limited population that is gonna look a lot more like an a rare disease and thalamus and also comes in behind, the SPINRAZA. So as we grow the business, I think, you know, 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 are gonna be very mindful of different ratios and, and the amount of investment, versus, growing our bottom line. But I think we can manage all of that, actually. So we will invest in our continued success for sure. In terms of external, you know, as I was saying earlier, I think we are 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 is still a fair amount of risk associated with that. And I think you know, if we have reasonable success with the pipeline, you know, you know, 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 is why we are focused on really growth in into the next decade. And there, we have the time to grow the assets and so we are looking a lot at you know, DC to phase 1 b, I would say, is probably our sweet spot. You know, we have been fairly intentional about M&A over the last 3 years. We have looked at everything and filtered through everything. We are not being as intentional now, but we can still be opportunistic. If we see something that would add to 1 of our existing franchises, But 1 of the things I am quite mindful of is distraction. You know, we have we have dramatically changing Biogen. You know, 4 years ago, we really only called on neurologists. And now, you know, our regional teams are looking at retina specialists, nephrologists, transplant nephrologists with lupus, it will be, you know, we are looking at a dermatologist and rheumatologist. We are looking at potentially epileptologists with ZURZUVAE. So that is-- you know, we have really expanded, the whole commercial organization. We are busy recruiting an awful lot of capability. Out of the top 150 executives in the company, you know, 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 is how I am thinking about it. Let's go to our next question.

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

David Amsellem: Thanks. So wanted to ask a commercialization question on litifilimab, and I realize I might be putting the cart before the horse here given the data readouts. But wanted to get your thoughts on how you are sizing the CLE opportunity relative to the SLE opportunity, bearing in mind that many patients with cutaneous disease have systemic disease, although there is no therapies approved for cutaneous disease or it is a much. there is 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.

Alisha Alaimo: Hi. 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 is 250 thousand patients that have CLE only. Where when you look at SLE, there is 300 thousand patients that have SLE only. there is 50 thousand patients that have both. So CLE in total is 300 thousand patients. When you also look at CLE, the way the team has phrased it, the CLE is life changing for a patient. In 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 percent. There is a split across rheumatology and dermatology, with only a third 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 do not prescribe the biologic for this disease, They really want to make sure the drug works it is safe, and, you know, fairly easy to use. They do not want a lot of monitoring, and they wanna 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 them to treat where, you know, with SLE, rheumatologists are already treating. So we wanna make sure dermatologists have the that they treat early and urgent, and we need to simplify this diagnosis for them so that patients are not experiencing any of these horrible irreversible damage that they talk about so much. And then accelerate the use of the higher efficacy treatments. So what we do not want to see in dermatology, like what you see in rheumatology, is them waiting. And we believe because derms already prescribe biologic and 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 and once we are on formulary. So we do look at it a little bit differently. Differently than we look at SLE.

Christopher A. Viehbacher: Alisha.

Tim Power: Let's go to the next question, please.

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

Danielle Brill: Hi, guys. Good morning. Thanks so much for the question. Maybe I will actually ask 1 on IgAN. So with the FDA now open to a 1-year eGFR endpoint, in that RAS agents are becoming the standard of care are you reconsidering PREVAIL 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.

Priya Singhal: Thank you, Danielle. You know, just stepping back I think we have assessed that while proteinuria remains a very relevant marker of disease activity as well as UPCR, EGFR really provides a more clinically meaningful measure of long term renal outcomes. So we are 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 IgAN. So we are going to. We are already embarking on this change. We think that the change is gonna 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 tildacerfont. 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 for tildacerfont and IgAN. So we will continue to keep both those aspects in mind as we reflect these updates.

Tim Power: Thank you. Your next question comes from the line of Mohit Bansal with Wells Fargo. Thanks, Priya. Let's go to the next question, please, Cynthia.

Mohit Bansal: Great. Thank you very much for taking my question and congrats on all 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 is what you mean by mid single digit growth, the 9 months of sales, and subtract that, 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 this seems like a lot of drop from third quarter to fourth quarter. So I would love to understand how you are thinking about it.

Robin C. Kramer: 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 this 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 timeframe, as well as some of the inventory dynamics I mentioned as it related to SKYCLARYS and some of our other products. So from a top line perspective, we had this positive pull forward The guidance update and where we have landed is factor. You might recall in the last earnings call, we did raise our guidance In the current quarter, we are lifting the lower end of the guidance range and that is driven primarily by the Appellis integration and the success we have had there both the top line performance as well as the earlier capture of the synergies on the expense side.

Tim Power: Thanks, Robin. Let's go to the next question, please.

Operator: Your next question comes from the line of Andrew Tye with Jefferies.

Analyst: Hey, good morning. Thank you. So on SLE, if litifilimab and DAPI, both succeed, 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. Thank you.

Alisha Alaimo: Thank you. This is Alisha, and I will take that answer. So we are 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 important. We also believe that they may offer, you know, some differentiation. So for example, we do know that DAPI 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, you know, in SLE, there is gonna 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 are waiting, as Christopher as Christopher mentioned, waiting on prescribing products. The patients have not 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 have had, We also believe that the commercialization, how you market the product, will become just as important. So it remains to be seen, but with 2 shots on goal, I think, we are gonna be able to compete to win, pretty well.

Christopher A. Viehbacher: And here again, I think Biogen has a lot of experience. We have had you know, multiple products in their MS portfolio, for instance, and have been able to find exactly which patient benefits from, which product at the right time. I think that will transfer to lupus as well if we are fortunate enough to have both of those products.

Tim Power: Thanks, Christopher. Let's go to our last question, please.

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

Marc Goodman: Yes, good morning. I heard your comment on inventory with SKYCLARYS, but could you just give us a little more detail just on the 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 the dynamic going on overseas because know, kinda country by country and what is come on and what is still to come on, what is growing, what is been reimbursed. Just give us a little more detail there. Thanks.

Alisha Alaimo: Hi, thank you. it is Alisha. I will take the first part of questions, especially around the U.S. We are encouraged by our 2026 performance with SkyClaris, especially as we continue to grow year over year. We do believe we will continue that growth moving forward. there is a couple 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 have 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 Skyclaris. That is now normalized at a much lower percentage than what we have had before, and we are 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 growth inflection as we look ahead.

Robin C. Kramer: And this is Robin, and I will speak to the ex US 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 SKYCLARYS globally. We continue to launch a new jurisdictions, including the recent approval in Brazil and so that is where the future growth from a demand perspective is focused on.

Tim Power: Thanks, Robin, and thanks, everybody, for your participation today. If you have got more questions, just reach out to us at the IR team here at Biogen. Thank you.

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