Good morning. My name is Qin (ph) and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen Second Quarter Earnings Call and Financial 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. [Operator Instructions] Thank you. I would now like to turn the conference over to Mr. Mike Hencke, Director, Investor Relation s. Mr. Hencke, you may begin your conference.

Good morning. And welcome to Biogen 's Second Quarter 2021 Earnings Call. Before we begin, I would encourage everyone to go to the Investors Section of biogen.com to find the earnings release and related financial tables, including our GAAP financial measures and a reconciliation of the GAAP to non-GAAP financial measures that we will discuss today. Our GAAP financials are provided in Tables 1 and 2, and Table 4 includes a reconciliation of our GAAP to non-GAAP financial results. We believe non-GAAP financial results better represent the ongoing economics of our business and reflect how we manage the business internally. We have also posted slides on our website that follow the discussions related to this call. I would like to point out that we will be making forward-looking statements which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. On today's call, I am joined by our Chief Executive Officer, Michel Vounatsos, Dr. Al Sandrock, Head of Research and Development, and our CFO, Mike McDonnell. We will also be joined for the Q&A portion of our call by Chirfi Guindo, Head of Global Product Strategy and Commercialization, and Alisha Alaimo, President of our U.S. Organization. As a reminder, during the Q&A portion of the call, we kindly ask that you limit yourself to 1 question. I will now turn the call over to Michel.

Good morning, everyone. And thank you for joining us. We have completed the first half of a transformative year for Biogen with progress across our Neuroscience Portfolio. However, I would like to start by addressing the confusion and criticism surrounding the recent approval of ADUHELM. We are cognizant of the key issues raised by the community and are working to provide additional clarity through the following goals: exploring all options to maximize patient access including for the underserved population and those more at risk due to ethnicity, educating on the updated label language, which I will discuss, publishing our Phase 3 results in a peer-review ed journal and disseminating additional data to inform clinical practice including the management of ARIA, expediting the execution of the Phase 4 confirmatory study, and leveraging the unique data generation opportunity we have with EMBARK, the longest and most comprehensive longitudinal study for an Alzheimer's disease therapy. Biogen stands behind our clinical data from 8 studies, with more than 3,000 patients that supported accelerated approval. As the FDA's current Chief stated publicly earlier this month, ADUHELM was approved appropriately on very solid grounds and represented the right thing to do for the patients. I want to be clear that Biogen stands behind the integrity of the review process. Respectful dialogue between the industry and regulators is standout and essential to advance the understanding of the therapeutic data driving innovation, as demonstrated more recently by the COVID-19 vaccines development programs of last year. We believe the accelerated approval pathway has transformed the treatment of oncology and now has the potential to transform the treatment of Alzheimer's disease. We appreciate the concerns about the price and are committed to ensure sustainability of the system and maximizing access for patients. Without access, every day that passes we estimate…

Thank you, Michel. I'd like to start by saying a few words about aducanumab. The accelerated approval of aducanumab has generated discussions reflecting a broad range of opinions, including about its efficacy, the FDA selection of the accelerated approval path, and the regulatory process in general. Since June 7th, the FDA has made several clarifying statements on these topics. As always, we deferred to the FDA as the lead voice on such matters. They are the independent regulatory body charged with weighing the data expertly and dispassionately in order to make critical decisions that have the potential to impact millions of people. But I thought it would be helpful to add our perspective about several of these topics, including our interactions with the agency. We are proud of the work our dedicated team has done to develop aducanumab and the hope it brings to patients with Alzheimer's disease. We are equally proud of the professionalism both our team and the FDA demonstrated during a very lengthy process. We therefore welcome a formal review into the interactions between FDA and Biogen on the path to the approval of aducanumab. A better understanding of the facts is good for everyone involved to assure confidence in both the therapy and the process by which it was approved. We will cooperate fully with the review, even as we prioritize the issues that affect patients. I want to underscore that it is normal and appropriate for scientists and clinicians to discuss the data from experiments and clinical trials to debate and to disagree on the interpretation of the data. That is how science advances, and we welcome these discussions. However, I would like to correct some of the misinformation we have seen recently. First, several people have stated that all anti-amyloid antibodies clear amyloid from…

Thank you, Al. As Michel noted, we were very pleased with our second quarter results as we continue to execute well. We continue to face competition from TECFIDERA generics in the U.S., which impacted our year-over-year financial performance. However, as we move forward, we remain fully focused on our core business, as well as the launch of ADUHELM in the U.S.. Total revenue for the second quarter of $2.8 billion, declined 25% versus the prior year at actual currency and 26% at constant currency. This decline reflects the impact of TECFIDERA generics, in addition to approximately $330 million in revenue, that was recorded in Q2 2020, related to the 1-time license of certain manufacturing-related intellectual property. We were, however, encouraged to see total revenue increase by 3% versus Q1 of 2021, primarily driven by the MS franchise and OCREVUS royalties. Total ADUHELM revenue for the second quarter was $2 million. I would refer you to our slides and commentary that we gave on our June 8th call for details on the accounting with Eisai and Neurimmune. Total MS revenue for the second quarter was $1.8 billion inclusive of OCREVUS royalties. Looking now at some of the individual products within MS. Global TECFIDERA revenue for the second quarter was $488 million. In the U.S., second quarter revenue of $178 million increased versus the prior quarter due to seasonality and shipping dynamics, and we expect TECFIDERA in the U.S. to continue to decline throughout the year. Outside of the U.S., second quarter TECFIDERA revenue of $309 million increased 15% versus the prior year, with 6% underlying patient growth. We were pleased with the continued ramp in VUMERITY revenue from $74 million in the first quarter to $91 million in the second quarter. And as Michel mentioned, we believe that VUMERITY can become…

Thank you Mike. It is an exciting time at Biogen. And it is all about execution for the coming period. Our base MS, SMA, Biosimilars business is performing well, demonstrating resilience despite competition. We have an incredible opportunity together with Eisai, and we are completely focused on operation execution for the global Launch of ADUHELM and hopefully soon lecanemab. We have positive Phase 3 data for the zuranolone in depression, and we are anxiously awaiting data for tofersen in SOD1 ALS. We believe we have a significant value creation opportunity ahead of us. We stand behind the clinical data for ADUHELM, including the integrity of the approval process. Again, today, our top priority special access, including for the underserved population and those more at risk due to ethnicity, and we are open to innovative approaches to ensure budget sustainability. In closing, I would like to thank our employees around the world who have demonstrated their dedication to making a positive impact on patients' lives. And all of the physicians, caregivers, and participants in our clinical development programs, our ability to deliver medicines to patients could not be realised without the passion and commitment. We will now open the call for questions.

[Operator instructions] As a reminder, please limit yourslf to one question. Your first question comes from the line of Jay Olson from Oppenheimer.

Thank you for taking the question. It's really been a rough ride for ADUHELM, and we appreciate you're hanging in there. It seems like ever since March of 2019, Biogen has been the target of constant assault from the media and other groups, which obviously intensified on June 7th when ADUHELM was approved. What do you suppose it is about Alzheimer's disease that causes the media to react so negatively to a drug that could actually help patients and their families, and not treat them with the same respect it is rightly shown to victims of other diseases like cancer?

Thank you, Jay, for the great questions. I will get started, and I guess I will add. Again, it's -- and you are absolutely right in your question and your description of what we are exposed to. But we are not the ones suffering the most. It's still the early day in the launch. It's still the beginning. And whatever the motives of the controversy are, the one who are potentially misled, confused, denied health, are the patients. If we look at the past experience, progress has to be made with the first step, and we can look at HIV, oncology, or MS, as Al said. And let me bring you back to early 1990s and HIV. The FDA approved a first product based on CD4 count. And they were tremendous controversy. Then there were progress on viral load and then survival. And then 29 products or so were approved until today. And today, it's managed HIV as a chronic disease. These came with tremendous investment in the field. And the importance of the biomarker is that it's often present prior to the clinical symptoms. And this situation, this scenario, could very well be the same for AD. Where are those today who were fighting at the time, the biomarker-base approval for HIV therapy a few years back? The same applies to oncology. Al?

Yeah, Jay. Thanks for the question. I do believe that the amyloid hypothesis, even before we got started with aducanumab, was a controversial topic and there were people lined up on both sides of the hypothesis, whether or not it's true. And that's -- an d people dug in their heels even before the aducanumab data were approved. And it's unfortunate. And many of these drugs probably didn't even engage target in the brain and yet we consider ed those negative results as meaningful. But the main thing, Jay, is that somewhere along the way, the patients got lost. And we'd like to bring the conversation back to the patients. And I highlighted the risks associated with the drug, but also the risks associated with not starting aducanumab in a timely fashion in the appropriate patients.

Next question.

We can now take the next question from the line of Michael Yee from Jefferies.

Thank you. Good morning, and I appreciate the comments and also the open letter from Al. Appreciate that. We had a question on early launch dynamics for ADUHELM. Maybe you can comment about the 325 sites, how those are going? Are they ready to dose patients? But more importantly, reimbursement access, specifically whether there's anything you can do with CMS to strike a deal or anything like that because I think those are the two bottlenecks or dynamics that people are going to get through. Thank you.

Thanks for the question, Mike. I will start and then Alisha will give you much more granularity because she is closer to the operation. The background noise and the controversy are unfortunate and not helpful, mostly for the patients, and they are confusing. Nevertheless, the team is making a lot of progress and I'm very proud about the hard work. Overall, it's a bit slower than what we assumed, but we're making tremendous progress with some positives and some headwinds. Alisha?

Yes. Thank you, Michel. And thank you, Michael, for the question. And though it is very early in our launch, I am happy to share with you a few critical areas that we've been monitoring that will provide some insights into how the landscape is evolving. I do have quite a bit to share, however, so I would ask that you please bear with me as I think I need to make it through some of these key topics that I believe you'll be very interested in. Let me first start with the patients. Physicians have definitely shared that since launch, there has been a significant amount of patient interest across the entire country. Not only from their existing diagnosed patients that they are aware of, but also from new patient referrals from primary care physicians, which is also excellent. On the last call that we held, I did share that the primary focus of our team is to provide access to patients, by supporting sites as they build the capability and infrastructure to treat patients. So sites are just now taking that first step in their internal process, which is to complete their P&T committee reviews. The majority of the Alzheimer's specialists that we have been talking to, have been really extremely, highly engaged, with both our commercial and our medical teams as they operationalize d their sites. We have seen several sites move faster than anticipated, which is also very good news for us. And as Michel mentioned in his opening, we estimate that 35% of the ready sites have completed a P&T review with a positive outcome or they've indicated that they're not requiring the step. As I'm sure you've also seen, a few centers have indicated that they will not provide access to ADUHELM for now.…

We can now take the next question from the line of Umer Raffat from Evercore.

Hi, guys. Thanks for taking my question. I just wanted to focus on Alzheimer's in two parts. First, I know there's a lot of discussion on donanemab early filing, and I'm a bit puzzled why there's lack of any commentary on a potential early filing for BAN2401. And I realize Eisai 's lead on regulatory matters, but I also understand you guys are on the steering committee. Should we expect a BAN2401 filing in 2021? And secondly, Alisha, just to clarify, for the 1.6 million sales for aducanumab in second quarter, how much of that was inventory? Because the sales number implies about 3,000 patients are on drug in June; is that right?

Yeah. I'll take the second part of that. It's Mike speaking, Umer. Thanks for the question. Then Al will take the second one. We typically don't get a lot into the channel dynamics, but it's early days. We don't have really clear visibility into patient metrics. For a drug like ADUHELM, it's very early days and obviously, we're pleased to see that we accomplished some shipments and we got the $1.6 million in sales done. But as those roll out to sites and translate into patient treatment, we'll have more to say about how much is in the channel and how much is actually going into patient treatment.

So more to come on that. But you can assume that since we had only 2 weeks, a big chunk of it is basically a channel. Al?

Yeah. Umer, as you know, we generally don't comment on the content of our regulatory interactions. We do think it's a very positive sign that the Lecanemab was awarded Breakthrough Therapy designation. And I know my colleagues at Eisai and Biogen will do everything we can to expedite the regulatory pathway.

And I would like to add that it's good to see followers with the same mechanism of action and a type of class effect that is so challenged. And as Biogen, we welcome new players and some of them being competition and some being partners. That's good for the clinician, that's good for the patient by definition.

We can now take the next question from the line of Marc Goodman from SVB Leerink.

Thanks. Good morning. Can you help us understand this NCD process? What are the scenarios of outcomes, and help explain to us what happens if there's a negative scenario? What would be a negative scenario, and what can you do about a negative scenario? Thank you.

All right. Thank you, Marc, for the question. I'll go ahead and answer that. While it's too early in the process to speculate the outcome of this NCD analysis, I will provide some information for people to understand that there are 5 potential scenarios [Indiscernible]. First, there is a no coverage decision. While this is theoretically an outcome, in the last 15 years there are no examples of FDA approved drugs not being covered. I think that that's important to know. Second, there is coverage to indication or basically label. And third, you can have coverage with restrictions. They can maybe give you restriction around specific population of patients, or they can limit prescribing, potentially the specialists, and then they'll define who those specialists are. Fourth, you can have coverage with evidence development. And lastly, it can be left to the MACs discretion. Importantly, once a national coverage decision is made, all of the MACs and Med Advantage plans, must abide by the NCD. Meaning the NCD will overrule any local or Medicare Advantage plan that is in place. That's why we believe NCD will drive some consistency of access and clear reimbursement expectations, which is actually very good for everyone since one of the questions that people have are, "Is this is going to be reimbursed. " With that being said, if there were to be a negative outcome, though we can't speculate on it, of course, in Biogen's true form, we would want to obviously have a conversation on that and see what other outcome potentially could happen, depending on additional data they might need.

Thank you Alisha.

We can now take the next question from Matthew Harrison from Morgan Stanley.

Great. Good morning. Thanks for taking the question. I was hoping you could comment a little bit more about the current reimbursement dynamics that you're seeing. And maybe specifically, if you could comment on whether or not you're aware of anyone that's been infused early in June with commercial drug, if they've actually been paid by a MAC or not. Thanks very much.

Thank you, Matthew, for the question. And unfortunately, I would love to give you an answer to that, but because it's early days and because processing claims takes quite a bit of time, unfortunately, I can't give you feedback on that yet because they are in the process. As I said before, I know that the Medicare Advantage plans have approved the prior authorizations, which actually is a good thing that those are in place because it does give sites some reassurance that they will get reimbursed. But as for the MACs, we know that they do have claims, but because it's under miscellaneous coding, it does take some time. I would love to give you that answer, but we just don't have it right now.

We can now take the next question from Phil Nadeau from Cowen & Company.

Good morning. Thanks for taking my question. Alisha, during your remarks, your answer to Michael 's question, you mentioned that a lot of the centers are setting up confirmation for beta amyloid presence in the patients. I'm curious why they're doing that. Are they taking that upon themselves to identify the patients, or confirm the patients, or are the diagnostic requirements being required by Medicare Advantage or the MACs?

Okay. Thank you for that question as well. Since PDUFA, we have continued to hear a high level of interest in our ABC program, which I talked about prior. Which is a CSF testing, which you heard me talk about in my first answer. Now, the reason why there is a high interest, is primarily due to three reasons. First, we're hearing a consistent message from the AD experts and the clinicians, that they will align their patient selection to the patient population studied in our clinical trials. So 100% of patients in our clinical development program were confirmed for amyloid plaques. However, just so you also know, no one's really come out with the policy yet, so I can't actually tell you that there's been a mandate on amyloid-beta confirmatio.But we would expect that, potentially, those will be on the policies. Second, there's currently no reimbursed test to confirm the presence of amyloid, in this program that we offer as a solution to provide access to patients who would otherwise lack the ability to pay for this lab test, let alone the cost of a PET scan. And as you know, for PET scanning 3rd, there are still several areas of the country, in particular the Mountain West, Hawaii, and Alaska, were access to amyloid PET is not available due to the distribution of radio pharmacies and limited half-life of the radioligand. But I also said in our prior call that we do need both PET and CSF and we have seen these orders come in for both of our lab partners. And we're still working diligently with a coalition to see if we can get PET reimbursement through CMS.

We can now take the next question from Paul Matteis from Stifel.

Hey. Great. Thanks for taking my question. I wanted to ask, what liability does a physician expose his or herself to if prescribing aducanumab ahead of an NCD? For example, if the drug is prescribed to a patient that ends up not being covered under an NCD or they don't follow certain -- I guess prior [Inaudible] is not the right word, but I now guess to prior [Inaudible] criteria for selecting patients, is there a risk that the treatment center could owe money back to Medicare? And do you think this could have a slowing impact on uptake because of this broader uncertainty surrounding financial exposure? Thanks.

I'll go ahead and take that question. I think that this is really an insightful one because this is where a lot of the fear comes from I think in the centers where they want to know, are we going to be reimbursed? And the answer to that is, you're not going to know until you try. And that's why we're now starting to see centers put through their claims and see how they get processed. However, when an NCD does come out, obviously at that point in time, CMS is also going to have to make a decision as to what they would do with those patients if they did fall outside of the NCD criteria. Unfortunately, we're not going to know until we get to the end of that process.

And if we step back, I would say this type of confusion is something we have seen all the way. When we launched SPINRAZA, there was a same confusion and the controversy is not adding to the clarity and the is making people being more fear, but we start to see things moving in the right direction. It's a beginning of a process, we're still at the early days.

We can now take the next question from Cory Kasimov of JPMorgan.

Hey. Good morning, guys. Thank you for taking my question. I wanted to follow up on some of the market metrics you discussed. I'm wondering if you can disclose how many P&T review s are outstanding and maybe more so the % that have come back negative? And are the public comments being made by some of the large influential sites like the Cleveland Clinic, having any sort of material influence on smaller community-type clinics that you picked up on, that may impact their early prescribing habits? Thank you.

Alisha?

Yeah. Okay, Cory. Thank you for the question. I think when it comes to the P&T committee, the stat that we gave you, the 35%, is actually the only stat that I can provide at this point in time. And this number changes on a daily basis. P&T committee reviews are happening across the country. We're obviously aware of the really big ones that become public. But some of the smaller ones that are in our targeted sites come in on daily basis, so I can't actually provide that accurate number. However, for the second part of your question, I can't comment on the decision-making process of the specific sites. However, I will say that we are disappointed that sites that have specialized in Alzheimer's disease have indicated they will not provide access to ADUHELM for now. This is not only disappointing for patients, but also for the AD specialists at the sites of course. Each site will have their own specific process and decision-makers, so there's not really a single reason. And even the reasons that you might see publicly are slightly different from what we actually hear directly which, again, causes even more confusion in the marketplace. And just so you know, we're making every attempt to get in front of these decision-makers, to help them better understand the science and data. And also there have been specialists and champions at these sites to see if they can reconsider their current policy. But do remember that many of the physicians can still prescribe the product and have asked for support to find alternative sites so they can infuse their patients. With that being said, there are going to be other sites that look to these accounts to see what kind of policies and procedures that they do put in place depending on their decision-making. However, at the end of the day, these accounts have also said it is just for now. And there may be a potential opportunity to have them reconsider that in the very near future.

Yeah. I just want to reinforce what Alisha just said. And I had the opportunity to engage with many clinicians and scientific leaders, including some from some of the centers that denied. It's the beginning of a process. And I think that we have also the responsibility to provide more data, as Al said. And we are working on that actively. Remember, we have the richest database in AD, in EMBARK.

And just to quickly add to that, where we have 35% that have completed a P&T review with a positive outcome or indicated they won't require, you should not assume that the remaining 65% have come back negative. It's very early days, and the majority of those are still outstanding.

I think we have time for one more question.

We can now take the next question from Terence Flynn of Goldman Sachs.

Great. Thanks so much for taking the question. I just wondered, Alisha, if you could expand a little bit on one of the potential NCD scenarios that you mentioned, the coverage with evidence development. Essentially, how that would work if there be a request for additional clinical work and if the drug would be covered during the time, or that additional clinical work would be conducted, or if the drug would not have coverage in that intervening time period. I think there's a little bit of confusion around the CED process. Thank you.

Yes. This is a great question and obviously we've looked into this as well. And unfortunately, an outcome of a CED can have so many different options. You could have something that's as restrictive as we're only going to allow 500 patients to be reimbursed in this clinical trial, to any patient can get reimbursed as long as it meets a certain criteria for us to get evidence. So I would love to be able to answer it directly, but we are so early in the path. We have no idea what the outcome is going to be, but a CED can take on many, many different forms.

Chirfi would like to add something.

Yeah. Just to add some perspective. There was a CED for the PET process in the first study -- first idea study, which enrolled for about 2 years. They enrolled about 16,000 patients between 2016 and 2018. It was like a clinical trial, very difficult to execute. And one of the challenges with that, as recognized by CMS, is that it only had 4% representation of minorities. So CED really have some challenges. And so as we continue to engage, we're going to be looking forward to making sure that if it is a CED, then it doesn't really restrict access to diverse patient populations.

Okay. For the first time ever we have an FDA approval, accelerated approval product, for Alzheimer's disease based on clear data showing the reduction in amyloid beta plaque, which is reasonably likely to predict clinical benefit and in this case, a reduction in clinical decline. Can we now urgently turn our attentions to the patients in need, the way we did for HIV and oncology? Thank you all for your attention today.

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