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Edited Transcript of BIIB earnings conference call or presentation 30-Jan-20 1:00pm GMT

Q4 2019 Biogen Inc Earnings Call

WESTON Feb 7, 2020 (Thomson StreetEvents) -- Edited Transcript of Biogen Inc earnings conference call or presentation Thursday, January 30, 2020 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alfred W. Sandrock

Biogen Inc. - Executive VP of Research & Development and Chief Medical Officer

* Jeffrey D. Capello

Biogen Inc. - Executive VP & CFO

* Joe Mara

Biogen Inc. - VP of Finance and Head of IR

* Michel Vounatsos

Biogen Inc. - CEO & Director

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Conference Call Participants

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* Aaron Gal

Sanford C. Bernstein & Co., LLC., Research Division - Senior Research Analyst

* Cory William Kasimov

JPMorgan Chase & Co, Research Division - Senior Biotechnology Analyst

* Evan David Seigerman

Crédit Suisse AG, Research Division - VP & Senior Equity Research Analyst

* Geoffrey Christopher Meacham

BofA Merrill Lynch, Research Division - Research Analyst

* Geoffrey Craig Porges

SVB Leerink LLC, Research Division - Director of Therapeutics Research, MD & Senior Biotechnology Analyst

* Jay Olson

Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst

* Matthew Kelsey Harrison

Morgan Stanley, Research Division - Executive Director

* Michael Jonathan Yee

Jefferies LLC, Research Division - Equity Analyst

* Philip M. Nadeau

Cowen and Company, LLC, Research Division - MD & Senior Research Analyst

* Robyn Kay Shelton Karnauskas

SunTrust Robinson Humphrey, Inc., Research Division - Research Analyst

* Terence C. Flynn

Goldman Sachs Group Inc., Research Division - MD

* Umer Raffat

Evercore ISI Institutional Equities, Research Division - Senior MD & Senior Analyst of Equity Research

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Presentation

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Operator [1]

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Good morning. My name is Carmen, and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen Fourth Quarter and Full Year 2019 Financial Results and Business Update. (Operator Instructions)

I would now like to turn the conference over to Mr. Joe Mara, Vice President, Investor Relations. You may begin.

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Joe Mara, Biogen Inc. - VP of Finance and Head of IR [2]

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Good morning, and welcome to Biogen's Fourth Quarter 2019 Earnings Call.

Before we begin, I encourage everyone to go to the Investors section of the biogen.com to find the earnings release and related financial tables, including 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 3 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've also posted our slides on our website that follows 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'm joined by our Chief Executive Officer, Michel Vounatsos; Dr. Al Sandrock, EVP, Research and Development; and our CFO, Jeff Capello.

Now I will turn the call over to Michel.

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Michel Vounatsos, Biogen Inc. - CEO & Director [3]

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Good morning, everyone, and thank you for joining us. First, let me start with some financial highlights. Biogen closed 2019 with quarterly revenues of $3.7 billion, an increase of 4% compared to the same period a year ago. For the full year 2019, Biogen generated $14.4 billion in revenues, representing growth of 7% year-over-year. Full year 2019 GAAP earnings were $31.42 a share, a 46% increase versus full year 2018. Full year 2019 non-GAAP earnings were $33.57 a share, a 28% increase versus full year 2018. We are pleased with the strong year-over-year growth as we continue to execute on our strategy for long-term leadership in neuroscience.

Now let me review the year. First, full year MS revenues, including OCREVUS royalties were $9.2 billion, an increase of 2% versus the prior year. The number of patients on our MS products globally increased 3% versus the prior year, driven by strong patients growth in emerging markets as well as all of the large mature European markets, and our business demonstrated resilience in the U.S. Our team has executed well, demonstrating our ability to compete in an increasingly crowded market.

We launched VUMERITY in the U.S. as an important new oral treatment option. It remains early in the launch, but so far, we are pleased with the level of interest from patients and physicians. Second, SPINRAZA generated full year global revenues of $2.1 billion, a 22% increase versus the prior year. This blockbuster performance was driven by strong year-over-year revenue growth in the U.S. and even greater revenue growth outside the U.S., including the expanded access program and clinical trials, over 10,000 patients are now being treated with SPINRAZA. Third, full year biosimilars revenue was $738 million, which represents 35% growth year-over-year, driven primarily by IMRALDI.

We estimate that our biosimilars generated approximately EUR 1.8 billion of savings to the European health care systems in 2019, which we expect will continue to increase in 2020. This is critical as we work to create financial headroom for innovation and contribute to the long-term sustainability of the health care system. We also bolstered our biosimilars business this quarter with a new transaction with Samsung Bioepis. This provides us access to 2 new potential biosimilars in ophthalmology with a significant market opportunity in major markets worldwide, including, for the first time, in the U.S. as well as commercialization rights to our anti-TNFs biosimilars in China.

Fourth, this was an historic year for R&D organization. We are inspired by what the positive implications of the aducanumab data may mean for patients, physicians and the broader scientific community who have been waiting decades for therapy that can reduce the clinical decline of Alzheimer's disease. We are actively engaging with the FDA as well as regulators in Europe and Japan, and we look forward to completing a regulatory filing in the U.S. as soon as possible. In addition, there has been important progress related to the redosing study as we have successfully submitted the protocol to the FDA, and we are currently working with the sites and ethics committees towards study initiation.

Fifth, beyond aducanumab, we continue to expand and progress our pipeline with approval for VUMERITY in the U.S., a positive data readouts for BIIB059 in lupus and adding 7 new clinical program in MS, ALS, Parkinson's disease, ophthalmology and brain contusion. 2019 was one of our most productive years in R&D, and we believe we have multiple opportunities for near-term value creation as we prepare for multiple potential launches in the early 2020.

Sixth, our cash flow generation remains strong and continued to provide us with significant optionality and flexibility to allocate capital. In 2019, we generated approximately $7.1 billion in cash flow from operations, an increase of approximately 14% versus the prior year. Throughout the year, we repurchased approximately 24 million shares for a total value of approximately $5.9 billion. As we have stated previously, we view share repurchase as an important element of thoughtful and value-creating capital allocation. At the same time, we have the financial flexibility and capacity to continue to evaluate potential external business development and M&A opportunities.

Over the past few years, we have executed 15 business development transaction, which have contributed to the significant expansion of our pipeline. We executed 4 deals over the past 3 months alone, including our proposed transaction with Pfizer for a potential symptomatic therapy with potential application in both Alzheimer's disease and Parkinson's disease. As we have demonstrated in the past, we are committed to maximizing returns to our shareholders while continuing to bring innovative therapies to patients, something that demands a thoughtful approach towards all our investment over both the short and the long term.

In summary, 2019 was a very productive and successful year for Biogen as we executed on our strategy and continued to deliver noticeable progress. Our core MS business continued to demonstrate resilience with growth in both patients and revenues, and we are excited to be launching VUMERITY. SPINRAZA continued to grow in the U.S. and even more so outside of the U.S. as we continue to expand into new geographies. With over 10,000 patients on therapy and the largest body of clinical data in SMA, SPINRAZA remains a foundation of care in SMA. We grew our biosimilars business, and we expanded our portfolio and geographic presence. We are preparing to lead in the fight against Alzheimer's disease as we plan for a U.S. filing for aducanumab. Beyond aducanumab, we expanded and progressed our pipeline with 7 new clinical programs and the positive data readouts in lupus. And we generated ample cash flow as we focus on strategically allocating capital to maximize shareholder return over the long term.

I will now turn the call over to Al for a more detailed update on our recent progress in R&D.

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Alfred W. Sandrock, Biogen Inc. - Executive VP of Research & Development and Chief Medical Officer [4]

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Thank you, Michel, and good morning, everyone. Before I begin, I would like to welcome back Dr. Maha Radhakrishnan as the new Chief Medical Officer at Biogen. Maha brings more than 16 years of experience across multiple geographies in a broad range of therapeutic areas. She previously worked with us here at Biogen as Vice President, Europe and Canada, Medical; and Vice President, U.S. Medical; and subsequently held senior positions in medical affairs at Bioverativ and Sanofi. Maha's extensive background will be crucial as we prepare for future pipeline launches, including the potential launch of aducanumab.

As Michel discussed, 2019 was an historic year for Biogen. In addition to announcing positive results on aducanumab, we made significant progress on building a multifranchise portfolio by receiving approval for VUMERITY, adding 7 clinical programs and advancing 2 programs to Phase III. Reflecting our modality-agnostic approach, our neuroscience pipeline now includes small molecules, antibodies, other advanced biologics, antisense oligonucleotides and gene therapy.

Let me now turn to the advances we made in the fourth quarter, starting with Alzheimer's disease and dementia. At the Clinical Trials on Alzheimer's Disease, or CTAD, annual meeting held last month in San Diego, we presented top line results from the Phase III studies of aducanumab in early Alzheimer's disease. Final analysis of these data showed that EMERGE was a positive study, with the high-dose regimen of aducanumab achieving statistical significance on both the prespecified primary end point of CDR sum of boxes as well as on all 3 prespecified secondary end points.

On the other hand, data from the ENGAGE study did not meet the primary end point. Although we do believe that data from patients who achieved sufficient exposure to high-dose aducanumab in ENGAGE support the findings of EMERGE. Please note that we do not expect to present additional data on aducanumab prior to a regulatory decision by the FDA.

As Michel said, with the support of the FDA, we are working to initiate the open-label aducanumab redosing study as soon as possible. We have successfully submitted the protocol to the FDA, and we are currently working with the sites and ethics committees towards study initiation. In this study, eligible patients previously enrolled in our clinical studies, including patients previously treated with either aducanumab or placebo, will be titrated to 10 milligrams per kilogram aducanumab infusions every 4 weeks.

In addition to aducanumab, we continue to advance a broad Alzheimer's disease portfolio, including the Phase III study of BAN2401; BIIB080, a tau-targeted antisense oligonucleotide in Phase I; BIIB076, an anti-tau antibody in Phase I; and gosuranemab, a distinct anti-tau antibody in Phase II for which we expect data next year. As we continue to develop our Alzheimer's portfolio, we aim to expand into even earlier patient populations to potentially prevent the clinical onset of the disease. To that end, our collaboration partner, Eisai, along with the Alzheimer's Clinical Trials Consortium, plans to initiate the AHEAD 345 program.

AHEAD 345 is comprised of 2 studies, termed A3 and A45. The A3 study will evaluate low-dose BAN2401 versus placebo in cognitively normal individuals who are currently below the threshold for amyloid positivity, but are at high risk for further amyloid accumulation. The A45 study will evaluate high-dose 240 -- BAN2401 versus placebo in individuals who are amyloid positive, but show little to no cognitive impairment. Together, these studies will evaluate whether administration of BAN2401 can slow amyloid accumulation or cognitive decline in the very early stages of Alzheimer's disease.

Turning to MS and neuroimmunology. This quarter, we are pleased to announce that VUMERITY, a novel oral fumarate, was approved by the FDA for the treatment of relapsing forms of MS. Detailed results from the Phase II EVOLVE-MS-2 study, which directly compared patient-reported GI tolerability of VUMERITY and TECFIDERA, were presented at the Annual Meeting of the European Charcot Foundation in November and published in the journal CNS Drugs earlier this month.

Specifically on the primary end point, these data showed that patients treated with VUMERITY self-reported 46% fewer days with intensity scores of at least 2 on the individual gastrointestinal symptom and impact scale compared to TECFIDERA. This result was highly statistically significant with a p-value of 0.0003. Consistent with these data, the proportion of patients who discontinued the study due to GI-adverse events was 0.8% for VUMERITY and 4.8% for TECFIDERA. Together, these data indicate that VUMERITY offers a clinically meaningful improvement in GI tolerability compared with TECFIDERA. Across our MS portfolio, we continue to advance BIIB091, an oral BTK inhibitor in Phase I; BIIB061, an oral remyelinating agent in Phase I; and opicinumab, a Phase II anti-LINGO antibody for which we expect data in the middle of this year.

Moving to our progress in immunology. There remains a tremendous unmet medical need for people living with lupus, including both cutaneous and systemic forms. Treatment options for lupus are limited and new medicines are needed to manage this difficult-to-treat and chronic disease. Our work in lupus builds on a long history that Biogen has in immunology, including both homegrown assets and collaborations. We were very excited to report positive data this quarter from the Phase II LILAC study of BIIB059, a potential first-in-class anti-BDCA2 antibody discovered and developed by Biogen in 2 forms of lupus that affect a total of approximately 800,000 individuals in the G7. This 2-part study evaluated BIIB059 versus placebo in individuals with active cutaneous lupus erythematosus, or CLE, with or without systemic manifestations; and in individuals with systemic lupus erythematosus, or SLE, with active joint and skin manifestations.

With a p-value of less than 0.001, the CLE part of the study met its primary end point by demonstrating a statistically significant response of BIIB059 on the percentage change from baseline in the CLASI-A score at week 16. The SLE part of the study also met its primary end point of reducing disease activity as measured by change from baseline in the total number of tender or swollen joints at week 24. In this study, patients treated with 450 milligrams of BIIB059 experienced a statistically significant reduction of 3.4 total active joint counts compared to placebo. In addition, improvements in skin disease and overall disease activity were consistently observed across multiple secondary end points. The safety and tolerability of BIIB059 supports its continued development, and we are planning to move forward to Phase III.

We believe that the BIIB059 program exemplifies important elements of our broader approach to R&D at Biogen. For example, by implementing biomarkers of target engagement and a measure of clinical efficacy early in clinical development, we were able to generate compelling proof-of-biology data and preliminary proof-of-concept data in Phase I, which were subsequently confirmed in a well-controlled Phase II study. We believe that such derisking strategies may serve to increase the probability of success of other programs across our portfolio.

In neuromuscular disorders, last month at the International Symposium on ALS Motor Neuron Disease, Biogen, Ionis Pharmaceuticals and our collaborators were awarded the HEALEY Center international prize for innovation in ALS. Presented by the ALS Center at Massachusetts General Hospital, this award recognized our contributions to the discovery and development of tofersen, our antisense oligonucleotide for SOD1-ALS. At this meeting, we were pleased to present the final data from the Phase I/II study of tofersen, which demonstrated a statistically significant decrease in CSF SOD1 protein levels and trends towards slowing of clinical decline as assessed by 3 independent measures compared to placebo.

Furthermore, treatment with tofersen reduced levels of neurofilament in both plasma and CSF. We are encouraged by the concordance across data sets generated in the study, including target engagement, clinical and neurofilament data and the broad potential of antisense oligonucleotides to target genetic drivers of neurodegenerative disease. We expect data from the Phase III VALOR study of tofersen next year. In addition, we continued to advance the Phase I studies of BIIB078, and ASO for C9orf72 mediated ALS; and BIIB100, a small molecule inhibitor of XP01 for sporadic ALS.

Turning to ophthalmology. This quarter, we completed enrollment in the Phase III STAR study of BIIB111 in choroideremia, a rare x-linked inherited retinal disorder that inevitably leads to blindness and currently has no approved treatments. Choroideremia affects approximately 15,000 individuals in the G7 and is caused by loss of function mutations in the gene-encoding Rab escort protein-1, or REP1. BIIB111 is a gene therapy aimed to address the underlying cause of this disease by expressing an AAV2-packaged REP1 transgene. In Phase I/II studies, patients treated with BIIB111 demonstrated a higher rate of maintained vision compared to natural history.

In addition, a subset of patients treated with BIIB111 in Phase I/II studies demonstrated a meaningful improvement in visual activity as defined -- sorry, in visual acuity as defined by a gain of at least 15 letters corresponding to 3 lines on the eye chart. Specifically, 21% of patients treated with BIIB111 demonstrated an improvement of at least 15 letters at 1 year as compared to only 1% observed in the NIGHT natural history study. The Phase I/II studies also demonstrated that BIIB111 was generally well tolerated with an acceptable safety profile. We are encouraged by these early signs of efficacy and safety and look forward to data from the Phase III study of BIIB111 toward the end of this year.

We are also advancing the Phase II/III study of BIIB112 in XLRP, with data expected in the middle of next year. In stroke, we continue to advance the Phase III study of BIIB093 or IV glibenclamide for cerebral edema caused by large hemispheric infarction, or LHI. In a Phase II study, treatment with BIIB093 was associated with a 46% reduction in midline shift, an imaging measure of cerebral edema, and reduced mortality by over 50%. We look forward to data from the Phase III study of BIIB093 in LHI by the end of next year.

In addition, the Phase II study of TMS-007 continues to progress. TMS-007 is a small molecule modulator of plasminogen that has the potential to become a best-in-class thrombolytic drug candidate for patients following an acute ischemic stroke. Data from this study are expected by the end of this year.

In movement disorders, we continue to advance cinpanemab or BIIB054, an anti-alpha-synuclein antibody for Parkinson's disease, with Phase II data expected in the second half of this year as well as the Phase I study for BIIB094, an antisense oligonucleotide targeting LRRK2. Last month, we reported top line results from the Phase II PASSPORT study of gosuranemab for PSP. The primary end point was not met, and we, therefore, discontinued the development of gosuranemab for PSP and other primary tauopathies. While we were disappointed in this result, we chose to continue the Phase II study of gosuranemab in early Alzheimer's disease given the potentially significant differences in disease pathophysiology. And in neurocognitive disorders, we continued to advance a Phase II study of BIIB104, an AMPA receptor potentiator for cognitive impairment associated with schizophrenia. We now expect data from this study in the second half of this year -- of next year.

Finally, we had a productive quarter on the business development front. Building further depth in ophthalmology, last month, we entered into an agreement with Catalyst Biosciences to develop and commercialize Pegylated CB 2782 for the potential treatment of geographic atrophy, or GA. GA is an advanced form of dry age-related macular degeneration, or AMD, that leads to blindness, has no approved therapies and affects approximately 1 million individuals in the U.S. alone. This molecule is a novel protease that selectively cleaves C3, a genetically validated target in AMD, and we are encouraged by preclinical data demonstrating that a single intravitreal injection of this protease eliminated over 99% of C3 from the vitreous humor for at least 28 days.

In addition, this quarter, we initiated a collaboration with CAMP4 Therapeutics to leverage their gene circuitry platform to potentially identify a suite of druggable targets in microglial signaling pathways already known to play a causal role in neurological disease. And most recently, we announced an agreement to acquire a novel CNS-penetrant small molecule inhibitor of casein kinase 1, or CK1, from Pfizer. CK1 is a key regulator of circadian rhythms, which can become disregulated and contribute to irregular sleep-wake rhythm disorder, or ISWRD, in Parkinson's disease as well as sundowning in Alzheimer's disease. ISWRD is a nonmotor symptom of Parkinson's disease characterized by fragmented sleep, severe fatigue and difficulties with activities of daily living. Sundowning affects approximately 20% of AD patients and causes patients to become confused, anxious and agitated later in the day.

In a Phase I study -- Phase Ia study, this molecule demonstrated an acceptable safety profile and proof of mechanism. Specifically, there was a statistically significant and dose-related increase in salivary melatonin concentration, a marker of circadian phase modulation. We believe this may represent an innovative symptomatic treatment for both AD and PD, and we expect to initiate a Phase Ib study by the end of this year. This transaction is subject to customary closing conditions, and we expect it to close in the first quarter of 2020.

Overall, Biogen R&D delivered significant progress in 2019. We believe we are in a strong position today with 27 clinical programs, including 6 programs in Phase III, 12 in Phase II and 9 in Phase I, with a deep preclinical pipeline across multiple modalities. With our plan to file aducanumab in the U.S. and multiple additional near-term opportunities ahead of us, we believe that no other company is as well positioned to develop potentially breakthrough medicines for patients living with devastating neurological diseases.

I'll now pass the call over to Jeff.

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Jeffrey D. Capello, Biogen Inc. - Executive VP & CFO [5]

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Thanks, Al. Good morning, everyone. Let me now provide more details on our financial performance for 2019 and share with you our guidance for 2020.

Let's start with revenues. As Michel mentioned earlier, we had a very strong performance in Q4 2019 across all of our core business areas. Total revenues for the fourth quarter grew 4% year-over-year to approximately $3.7 billion, and grew 7% for the full year to $14.4 billion. Overall, our MS business delivered revenues of $2.4 billion in the fourth quarter of 2019, including OCREVUS royalties of approximately $205 million.

MS revenues in Q4 2019 decreased 1% versus the prior year without OCREVUS royalties, and increased 2%, including OCREVUS royalties. U.S. MS revenues in the fourth quarter of 2019 benefited from an increase in channel inventory of approximately $135 million compared to an increase of approximately $105 million in Q4 2018. Based on historical results, we typically see a decrease in channel inventory in the first quarter following a year-end build of inventory. Full year MS revenues were $9.2 billion, including OCREVUS royalties of approximately $688 million. Full year MS revenues decreased 1% versus the prior year without OCREVUS royalties and increased 2% versus the prior year including OCREVUS royalties.

Global fourth quarter TECFIDERA revenues were $1.2 billion, a 5% increase versus the prior year. This included revenues of $877 million in the U.S., an increase of 2% versus Q4 2018 and $284 million outside the U.S., an increase of 12% versus the fourth quarter of 2018. TECFIDERA benefited from an increase in channel inventory in the U.S. of approximately $100 million in the fourth quarter of 2019 compared to an increase of approximately $60 million in Q4 2018. Throughout 2019, we were pleased to see 4 consecutive quarters of relative stability in our share of total prescriptions for TECFIDERA in the U.S.

In addition to strong performance from TECFIDERA, we launched VUMERITY in late Q4 in the U.S., and recorded $5 million of revenue, all of which we attribute to channel loading. Outside the U.S., TECFIDERA again performed very well in the fourth quarter with strong patient growth in all major European markets and approximately 50% patient growth in Asia Pacific and Latin America versus the prior year. For the full year, worldwide TECFIDERA revenues were $4.4 billion, an increase of 4% versus the prior year. This included $3.3 billion in the U.S. and $1.1 billion in sales outside the U.S.

Interferon revenues, including both AVONEX and PLEGRIDY, were $516 million during the fourth quarter, a decrease of 14% versus Q4 2018 due to a continued shift from the injectable platforms to oral or high-efficacy therapies. This included $359 million in the U.S. and $157 million in sales outside the U.S. Interferon revenues outside the U.S. were negatively impacted by channel dynamics and timing of shipments. Within the U.S., AVONEX and PLEGRIDY benefited from an increase in channel inventory of approximately $30 million compared to an increase of approximately $35 million in Q4 2018. For the full year, worldwide interferon revenues decreased 11% to $2.1 billion, consisting of $1.4 billion in the U.S. and $675 million in sales outside the U.S.

TYSABRI worldwide revenues were $473 million this quarter, an increase of 2% versus the fourth quarter of 2018. This included $270 million in the U.S. and $203 million outside the U.S. In the U.S., revenues increased 5% versus the prior year, representing the fourth consecutive quarter of improved performance on a year-over-year basis. Within the U.S., inventory levels for TYSABRI were relatively stable compared to an increase of approximately $10 million in the fourth quarter of 2018. Throughout 2019, we were pleased to see relative stability in TYSABRI's share of both new and total prescriptions in the U.S.

Outside the U.S., TYSABRI revenues decreased 2% versus the prior year as revenues were negatively impacted by channel dynamics and timing of shipments. For the full year, worldwide TYSABRI revenues were approximately $1.9 billion, an increase of 2% versus prior year. We recorded U.S. revenues of $1 billion and $850 million internationally. Overall, we were very pleased with the performance of our MS business in 2019 and are focused on maintaining the resilience of this franchise in light of new competition entering the market.

Let me now move on to SPINRAZA. Global fourth quarter SPINRAZA revenues were $543 million, a 16% increase versus the prior year and relatively flat versus the third quarter. In the U.S., SPINRAZA revenues for the fourth quarter of 2019 were $243 million, an increase of 3% versus both Q4 2018 and Q3 2019. The number of patients on therapy in the U.S. increased 2% as compared to the end of the third quarter of 2019, with growth coming from both the pediatric and adult patient segments. We continue to make strong progress with adults as more than 50% of the new starts in Q4 were adults and growth in adults exceeded our overall patient growth.

As a reminder, the adult population is the largest segment of the market. We have continued to see an impact from gene therapy within the infant population, which represents approximately 5% of the total SMA market.

Outside the U.S., SPINRAZA revenues in the fourth quarter of 2019 were $300 million, an increase of 28% versus the prior year and a decrease of 3% versus the prior quarter. Outside the U.S., we saw strong growth in patients across all regions, with broad growth from both existing and newly launched countries. The number of commercial SPINRAZA patients increased approximately 10% versus the third quarter of 2019. Despite strong overall patient growth, fourth quarter ex-U. S. SPINRAZA revenues decreased slightly versus the third quarter this year due to a combination of loading dose dynamics, country mix, the timing of shipments in certain markets and pricing dynamics.

Overall, we were very pleased with SPINRAZA's performance again this quarter as we saw continued patient growth across the large, mature markets and strong uptake in the emerging markets. Additionally, more than 50% of our revenue came from outside the U.S., and there remains significant opportunity to reach additional patients, particularly outside the U.S. For the full year, worldwide SPINRAZA revenues increased 22% to $2.1 billion, driven by 9% growth in the U.S. to $933 million and 34% growth outside the U.S. to $1.2 million.

Let me now move on to our biosimilars business, which generated revenues of $196 million this quarter, growing 25% versus the prior year. We estimate that we have more than 200,000 patients receiving treatments with our 3 anti-TNFs biosimilars, which is a significant increase of approximately 70% versus the prior year. BENEPALI is the leading Enbrel biosimilar in Germany, the U.K. and Italy. FLIXABI is the most prescribed REMICADE biosimilar in Italy. And IMRALDI is the leading HUMIRA biosimilar in major markets such as Germany and the U.K. For the full year, biosimilars revenues grew 35% to $738 million.

Turning to our anti-CD20 revenues. We recorded $601 million for the fourth quarter, an increase of 12% versus the prior year primarily driven by OCREVUS royalties. Full year anti-CD20 revenues were $2.3 billion, a 16% increase versus 2018. In fourth quarter, we saw the first entry of a RITUXAN biosimilar. We expect additional biosimilar entrants in 2020, which we expect will put further pressure on RITUXAN revenues. Also as a reminder, our royalty rate on U.S. sales of OCREVUS resets every calendar year.

Total other revenues were $146 million in the fourth quarter, a decrease of 12% versus the prior year due to the timing of shipments. Other revenues were $708 million for the full year, an increase of 21% versus 2018. As a reminder, other revenues in the first quarter of 2019 benefited from a large one-time shipment of Bioverativ. In addition, note that revenues are variable and difficult to predict.

Let me now turn to gross margin performance. Q4 2019 gross margin was 88% of revenues versus approximately 86% in the fourth quarter of 2018. The improvement in gross margin was due to slightly lower royalties as well as lower cost related to our other revenues. Gross margins for the full year 2019 were approximately 86%, relatively flat compared to full year 2018. Q4 GAAP and non-GAAP R&D expense was 19% of revenue or $692 million. Q4 R&D expense includes $63 million related to the transaction with Samsung Bioepis, the $45 million opt-in payment we made to Ionis related to BIIB080 and $30 million related to our collaboration agreements with CAMP4 Therapeutics and Catalyst Biosciences.

Full year GAAP and non-GAAP R&D expense was 16% of revenue or $2.3 billion. Q4 GAAP SG&A expense was 18% of revenue or $665 million. Q4 non-GAAP SG&A expense was 18% of revenue or $662 million. Both GAAP and non-GAAP SG&A increased versus the prior quarter primarily due to increased commercial and medical investments as well as the timing of spend on G&A. Full year GAAP SG&A was 17% of sales or $2.4 billion. Full year non-GAAP SG&A was 16% of sales or $2.3 billion.

GAAP other expense, which includes interest, was $49 million in the fourth quarter and GAAP other income was $83 million for the full year. Non-GAAP other expense was $50 million in the fourth quarter and $110 million for the full year. The difference between these GAAP and non-GAAP results is driven primarily by gains on strategic investments, which we classify as GAAP only. In the fourth quarter and the full year, our GAAP and non-GAAP tax rate was approximately 16%. Compared to the prior year, GAAP and non-GAAP tax rates for both the full year and the fourth quarter of 2019 benefited from a nonrecurring change in the company's tax profile in 2019 and the sale of the remaining portion of higher tax inventory in 2018 due to intercompany effects. Furthermore, the GAAP rate also benefited from the unfavorable prior year effect of U.S. tax reform in 2018.

Our weighted average diluted share count was approximately 178 million for the fourth quarter and 187 million for the full year. Throughout 2019, we repurchased approximately 24 million shares at an average price of approximately $249 for a total value of approximately $5.9 billion, including approximately 7.7 million shares in the fourth quarter for a total value of approximately $2.1 billion. As of the end of the year, we had a total of approximately $6.3 billion in share repurchase authorization outstanding, including the new $5 billion plan approved by the Board in December of 2019. Which now brings us to our diluted earnings per share. In the fourth quarter, we booked GAAP EPS of $8.08, an increase of 71% versus the fourth quarter of 2018 and non-GAAP earnings per share of $8.34, a 19% increase versus the prior year. For the full year, GAAP EPS was $31.42, a 46% increase versus 2018 and non-GAAP EPS was $33.57, a 28% increase versus 2018.

We generated approximately $2 billion in net cash flows from operations in Q4 and approximately $7.1 billion for the full year, marking the final year where cash flows are impacted by payments to Fumapharm. We ended the quarter with approximately $5.9 billion in cash and marketable securities and $6 billion in debt.

Let me now turn to our full year guidance for 2020. We expect revenues of approximately $14 billion to $14.3 billion. We anticipate GAAP and non-GAAP R&D expense to be between 15% and 16% of revenues. We expect GAAP and non-GAAP SG&A expense to be approximately 19.5% to 20.5% of revenue. We anticipate our GAAP and non-GAAP tax rates for 2020 to be between 18% to 19%. And we anticipate full year 2020 GAAP diluted earnings per share results of $29.50 to $31.50 and non-GAAP diluted earnings per share to be between $31.50 to $33.50.

It's important to note that this guidance does not include any impact from potential acquisitions or large business development transactions as both are hard to predict. This guidance does assume our proposed transaction with Pfizer closes. Our guidance also assumes a stable share count off the fourth quarter of 2019 and no change to foreign exchange rates. Importantly, our guidance also assumes no generic competition in the U.S. for TECFIDERA in 2020 and assumes additional commercial and R&D expenses related to aducanumab. This guidance reflects our best assumptions as of now. And as a reminder, we will provide an update midyear on our second quarter earnings call.

I'll now turn the call back over to Michel for his closing comments.

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Michel Vounatsos, Biogen Inc. - CEO & Director [6]

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Thank you, Jeff. We delivered strong performance in 2019 with growth across all of our core business areas, double-digit earnings growth versus a year ago and strong execution across each pillar of our strategy. For 2020, we aim to continue our momentum by executing well on our strategic priorities across MS, SMA, biosimilars and our pipeline, with a priority on aducanumab. We are actively preparing for the potential launch of aducanumab with an initial focus on the U.S. This includes implementing a thorough go-to-market model, hiring the sales force, building out our medical teams and preparing for market access. In addition, we are actively engaging with regulators outside of the U.S., including Europe and Japan.

Beyond aducanumab, our pipeline is maturing. We now have 6 programs in Phase III and 27 clinical programs overall, an increase from 17 just 3 years ago. We have multiple near-term opportunities for value creation, including in Alzheimer's disease, ALS, stroke, lupus, ophthalmology and biosimilars as we aim to build a multifranchise portfolio. Between now and the end of 2021, we expect 11 mid- to late-stage data readouts, including Phase III readouts for tofersen in ALS, BIIB111 in choroideremia and BIIB093 in large hemispheric infraction and 8 Phase II readouts across MS, Alzheimer's disease, Parkinson's disease, ophthalmology, schizophrenia, acute neurology and neuropathic pain.

As the leader in neuroscience with asymmetric core capabilities, we believe that no other company is better positioned to continue to deliver breakthrough therapies for diseases of the nervous system to address a significant and growing unmet medical need. We'll continue to execute on our core strategy to build the multifranchise portfolio across our core and emerging growth areas. I want to reiterate our commitment to maximizing returns to our shareholders and bringing innovative therapies to patients over the long term. This demands that we continue to look at capital efficiently, effectively and appropriately. As we have demonstrated in the past, we will always strive to have an optimal capital structure as well as aim for superior returns from the investment we make.

I'd like to take a moment to discuss our broader purpose as an organization as we aim to pioneer science for the betterment of humanity. This includes doing the right thing for patients, our employees, the environment and the community, all of which we believe contributes to a long-term sustainable shareholder value. I am proud of what Biogen stands for, and I believe this approach positions us well to be a sustainable organization over the long term as we remain focused on being the leader in neuroscience to address the tremendous societal needs in this space.

Finally, I would like to thank our employees around the world who are dedicated to making a positive impact on patients' life, and all of the physicians, caregivers and participants in our clinical development programs. Our past and future achievements could not be realized without their passion and commitment.

We will now open the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Geoff Porges with SVB Leerink.

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Geoffrey Craig Porges, SVB Leerink LLC, Research Division - Director of Therapeutics Research, MD & Senior Biotechnology Analyst [2]

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Congratulations on the quarter and the results and all the progress. Just a quick couple of questions, Jeff, on the guidance. Could you talk about what assumptions are built into your guidance about the effect of the Risdiplam imminent launch on SPINRAZA? And also just have you incorporated the full launch costs for aducanumab? Your sales force and everything you mentioned that, but is it fully budgeted in that guidance?

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Jeffrey D. Capello, Biogen Inc. - Executive VP & CFO [3]

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So thanks for the questions, Geoff. So with regard to Risdiplam, we are assuming that that product does launch. And so we're anticipating, as everyone else is, to kind of see the data and kind of what it means. We'll just remind people that we have 10,000 people on therapy today, doing very well with a very low discontinuation rate. So we'll see kind of what happens on the data and how that product is received. But certainly, there's a lot of growth opportunity for us ahead.

With regard to aducanumab, we're not going to give specific perspective on numbers in terms of the launch. But I would just point you back to looking at the SG&A guidance, which is up quite a bit from a percentage perspective, and you get a sense of the amount we're spending year-over-year relative to that we spent last year. And that is, I think, the prudent thing to do, given this significant opportunity ahead of us, which we're quite excited about.

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Operator [4]

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Your next question comes from the line of Terence Flynn with Goldman Sachs.

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Terence C. Flynn, Goldman Sachs Group Inc., Research Division - MD [5]

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Maybe just 2 for me. Just wondering if you can give us any more detail on what's gating to the aducanumab filing? And then are you expecting a priority review? And then the outlook in terms of the ex-U. S. regulatory filings there. Do you have a similar level of confidence in filing in both Europe and Japan as you do in the U.S.?

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Alfred W. Sandrock, Biogen Inc. - Executive VP of Research & Development and Chief Medical Officer [6]

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Terence, this is Al. We -- it's basically a matter of putting together documentation, the electronic common technical document, it's an electronic document with hyperlinks, et cetera. It's a matter of assembling all that and submitting that to the FDA. And in terms of the engagement, we've been engaged with them since last -- the first Type C meeting last June, and it's been very constructive. It's -- I've never -- this is a unique situation to me. It's pretty unusual, I think, across the industry. But I'll say that it's been -- there's been a high level of constructive engagement ever since last June. And with respect to the other regions, we have started our engagement with them, but it's still early days. And -- but we do anticipate that we will be filing at some point in those other regions as well at some point.

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Operator [7]

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Your next question comes from the line of Ronny Gal with Bernstein.

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Aaron Gal, Sanford C. Bernstein & Co., LLC., Research Division - Senior Research Analyst [8]

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Congratulations on the results. You've mentioned you're beginning to -- the redosing trial. I wonder if you can just tell us a little bit about what you're trying to achieve with that trial. Essentially, now that you've got a protocol, what are the end points and what is the data that we should see from that? And then second on VUMERITY, can you describe a little bit the launch plans here? I guess it didn't really make commercial step yet. Can you talk a little bit about whether you intend to give it the same kind of parity business model to TECFIDERA? Or will there be some things you do with VUMERITY that -- in terms of access, support and so forth, that will be better or worse than TECFIDERA?

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Alfred W. Sandrock, Biogen Inc. - Executive VP of Research & Development and Chief Medical Officer [9]

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Ronny, it's Al. Well, the main reason for the redosing study were humanitarian reasons. We had all these patients who had volunteered to be in our clinical studies. They helped us develop aducanumab. We thought we owed something to them. Many of them had expressed a desire to the investigators that they wanted the drug. So that's the primary reason. As I said on -- in my notes that -- in my script that it's a single-arm study basically. Every patient gets titrated up to 10 milligrams per kilogram, aducanumab. And all patients who were in prior studies, including placebo patients are eligible.

In a single-arm study, the main thing you can really look at is safety and tolerability, and we had always envisioned doing a long-term extension study, in fact, we had one in place to evaluate long-term safety and tolerability. And so that's the primary end point of the study. In addition, of course, we'll add -- we'll take a look at efficacy as best you can in a single-arm study because we would be interested in continued -- if there's durable effect. Obviously, we'll be looking at amyloid and other biomarkers. And we'll also see whether or not the treatment gap had any effect on these kinds of markers.

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Michel Vounatsos, Biogen Inc. - CEO & Director [10]

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So Ronny, concerning the second part of your question. With superior to take GI tolerability, we have the opportunity with VUMERITY to strengthen the overall fumarate portfolio. But TECFIDERA remains front and center in our promotion, you see the performance, we continue to support. And again, a key metric will be to increase the share of this fumarate down the road. We are pleased with the access to date that is superior to what we have seen from competition a few months after launch, and for some competitor, 12 months after launch. So we are pleased with the access. We monitor very closely the stat forms and the grads. We are pleased to see so far that there is more stat forms being issued ex-TEC than TEC. So this is -- but it's still the beginning. It's a bit too early. We'll come back with more color when we have more data.

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Operator [11]

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Your next question is from the line of Phil Nadeau with Cowen and Company.

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Philip M. Nadeau, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [12]

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It's actually on TECFIDERA and the IP. I believe we're going to get a decision on the IPR next week. Can you remind us, in the case where the IP were to fall, what would be the next steps? What is the appeal process there? And then secondarily, what is the status of the court case? Can you give us an update on the time lines there, should the IPR actually go your way next week?

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Jeffrey D. Capello, Biogen Inc. - Executive VP & CFO [13]

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Yes, so it's Jeff. So there is an expected decision from the IPR perspective no later than the end of the first week of February, so that will be the first of the 3 decisions. Depending on how that goes, if it goes in our favor, that's great. If it doesn't, we plan to appeal, and the appeal process typically takes 12 to 18 months. 2 other cases, West Virginia and Delaware, are expected to read out some point midyear, plus or minus a month or 2. Depending on how those go, if those go our way, that's great. If not, we plan to appeal those; and the appeal period, again, tends to take 12 to 18 months. So we obviously await kind of the results of that.

We do believe we have valid patents. Nonetheless, these outcomes are difficult to predict. There's a number of considerations that need to be weighed. There's obviously multiple decisions that we just talked about, there's the appeal periods. And then there's handicapping whether or not people -- if we're unsuccessful, we'll launch at risk. So it's difficult to predict in the short term, so we'll keep people apprised at kind of the developments as we move our way through the year.

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Operator [14]

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

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Umer Raffat, Evercore ISI Institutional Equities, Research Division - Senior MD & Senior Analyst of Equity Research [15]

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Al, I just wanted to focus on Alzheimer's for a minute, if I may. And it's very clear that FDA has a long history of approving CNS drugs, which have failed and/or negative trials in the past. However, every time FDA goes down that direction, I find that they pool results across every single thing. So my question is, if you pool results across ENGAGE, EMERGE and Phase Ib, what does that look like? That would be very helpful to understand. And also how many post-hoc analyses were done before you guys arrived at the Protocol Version 4 population. I mostly ask because I'm trying to understand how we should think about what should be the p-value given all the splits that theoretically should be thought about before we arrived at the PV 4?

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Alfred W. Sandrock, Biogen Inc. - Executive VP of Research & Development and Chief Medical Officer [16]

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So Umer -- I mean sorry, Umer, this is Al Sandrock. I -- we haven't disclosed the results of any other kinds of analyses, including pooling or subsets. So we're not going to do that this morning. But I would say that -- I would not assume that -- I mean when you look back in the history of approved drugs, I wouldn't say it's always the case that pooling is done. I think that there are exceptions to that, and so I would not assume that here. And let's see, your question -- the other question was, how many post-hoc analyses, we did say it was post hoc, but I don't remember how many there were.

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Operator [17]

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Next question is from the line of Geoff Meacham with Bank of America.

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Geoffrey Christopher Meacham, BofA Merrill Lynch, Research Division - Research Analyst [18]

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Just have a few. On SMA and clinical development, patients on ZOLGENSMA switched back to SPINRAZA. Just curious if you guys have seen evidence that this is occurring in the real world? And then Al, a bigger picture question on Alzheimer's. So if I assume that an Abeta antibody is an anchor therapy, when we look down the road at combination approaches, is there sort of a fast path to derisk? In other words, do you feel like FDA -- you can look at surrogate markers such as a PET imaging initially, and then down the road, look at cognition? Just want to get a sense for looking at post aducanumab?

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Alfred W. Sandrock, Biogen Inc. - Executive VP of Research & Development and Chief Medical Officer [19]

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Yes. So we -- your first question was about SMA and ZOLGENSMA. I mean I don't really consider that switch back, if you will, because if they've had ZOLGENSMA, arguably that they're still on it, if you will. They're getting the effect of the gene therapy. So in some ways, it's like a combination of adding SPINRAZA. We have heard about that. It does happen in the real world. And you might wonder why people are doing that, I think it's because the parents and the physicians feel like there might be more room to improve. And so that's what I hear from -- in the real world. But in terms of data from that, we are starting to collect that data, but we have -- don't have any conclusions at this point. But we are -- because it's happening in the real world, and since we're very interested in real-world evidence, we are starting to collect that data.

In terms of Alzheimer's in combination, I mean one of the reasons why we built the pipeline the way we did was that we had always envisioned combination therapy. And the first obvious thing to combine a aducanumab or BIIB2401 with would be an anti-tau or a tau ASO something that affects tau. We were actually pleasantly surprised that aducanumab already affects tau, though, so we'll have to keep that in mind. But nevertheless, I think the most obvious thing to do would be to combine with tau as the next step, and it may be that there are certain stages of the disease that need the combination more than other stages.

And in terms of a fast track, yes, we will employ biomarkers, not only of the toxic proteins that we're trying to reduce, Abeta and tau, but also potentially other kinds of biomarkers that look at additive effects in a more expedient way. But I mean ultimately, I anticipate we will need to show some effect of the combination on reducing clinical decline further, I think that will still be important. Unless you can't do it. In other words, if you're in an early stage of Alzheimer's where there's no cognitive impairment, you may not be able to do it, where biomarkers may -- alone may be the only approach.

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Operator [20]

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Your next question is from the line of Michael Yee with Jefferies.

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Michael Jonathan Yee, Jefferies LLC, Research Division - Equity Analyst [21]

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You had made some comments around preparation for aducanumab, including SG&A. Could you just put a little more color around, I guess, the work being done in terms of timing of when you actually expect the sales force to be on? And maybe some comments around what you're hearing from payers, and what they would -- how they are putting their perspective to this type of drug? And what type of access that type of drug would get? And then just a quick one also for Al. There is a DIAN-TU study reading out. I'm sure people will try to make read-throughs into what this means for the beta amyloid about this? Just maybe just a comment on anything to know or your perspective on that study.

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Michel Vounatsos, Biogen Inc. - CEO & Director [22]

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So Michael, if I can get started with the launch readiness. Actually, the work started more than 2 years ago with an understanding of the patient journey, from origination to diagnosis, the referral dynamics that changed from market to market, and even within the U.S., which is different, understand the different types of market within the U.S., it's the different segments. We have analyzed the go-to-market for the U.S. This has been approved and this is funded in our budget, as discussed. And the hiring has started, first with the medical affairs, obviously. Engagement with scientific leaders, also at the community level is important. And also the biomanufacturing needs to be stepped up and be ready for eventually a larger demand with the functional support, okay? To support the increased engagement and team.

In terms of price, it's still early, even if we are making progress. We engage with stakeholders because, as you can imagine, there is almost no drug cost today. So we engage with patient association, pharmacoeconomics, [therapeutics] and all the customers, mostly in the U.S. and beyond the U.S. Beyond the price, it's all about the access condition and the affordability. We know that the more we wait, the more transition -- the people will transition to full-blown assistance and loss of dependence, which costs so much the society. So basically, we start engaging. And hopefully, we'll have all the incentives in that field in order to further invest in R&D. This is our belief. So good progress, step-by-step, but we engage broadly and we ask for advice and we listen.

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Alfred W. Sandrock, Biogen Inc. - Executive VP of Research & Development and Chief Medical Officer [23]

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Michael, it's Al. DIAN-TU, so DIAN is the dominantly inherited Alzheimer's network. So obviously, in these patients, amyloid is likely to be causal because most of the dominantly inherited mutations that lead to primarily Alzheimer's disease are patients either in APP, the amyloid precursor protein, or enzymes that process it. So -- and so I think that these are very interesting studies. My understanding is that solanezumab and gantenerumab are being tested. If the results are positive, I think that that would lend further support to the amyloid hypothesis. If the results are negative, I'd want to see that there is evidence of target engagement and biological changes in the brain before I make any conclusions.

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Operator [24]

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Your next question is from the line of Cory Kasimov with JPMorgan.

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Cory William Kasimov, JPMorgan Chase & Co, Research Division - Senior Biotechnology Analyst [25]

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I wanted to ask on capital allocation. And given the company's current portfolio and pipeline, considering prevailing market dynamics, how do you look at the relative attractiveness between continued share repurchases, considering the $6-plus billion in dry powder you have there, and business development opportunities? I guess do you have enough bandwidth to do both in a meaningful way? And do you -- and how much of an appetite do you have on the acquisition front at this time?

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Jeffrey D. Capello, Biogen Inc. - Executive VP & CFO [26]

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So Cory, it's Jeff. Thanks for the question. So we're in a good position from that perspective, right? We have no net debt as of the end of the year. In 2019, we generated $7 billion of cash flow, and we expect that we'll have a strong cash flow year again in 2020. So we've got the financial flexibility to do both, and we have been doing both. Over the last 3 years, we've done 15 M&A BD-type transactions, spending $3.5 billion. And in the last year alone, we bought back 24 million shares for almost $6 billion. So our interest is strong in terms of building the pipeline. We've taken the pipeline from 17 clinical assets to 27, significant increase.

And of those 27, there's 11 that have important readouts in the next 2 years, 5 of which could have a meaningful impact on the company. So we feel good about that. We'd like to continue to add to those assets and build the pipeline. But at the same point, we have $6.3 billion of authorized share repurchase capability as well. So we'll continue to make good decisions that are in the best interest, long-term to the shareholders, and we'll have the capacity to do both.

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Operator [27]

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Your next question is from the line of Matthew Harrison with Morgan Stanley.

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Matthew Kelsey Harrison, Morgan Stanley, Research Division - Executive Director [28]

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I had one for Al on 2 pipeline programs. Al, can you just comment why a LRRK2 ASO could be differentiated from the kinase inhibitors that we've seen in development? And then maybe just share your views on anti-LINGO-1 MS? So has that changed since you initiated that study? Or any updated news there?

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Alfred W. Sandrock, Biogen Inc. - Executive VP of Research & Development and Chief Medical Officer [29]

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So LRRK2 is a wonderful target, we believe, for Parkinson's disease, not only for this -- for patients with familial PD due to LRRK2 mutations, but also potentially even for sporadic Parkinson's disease. And the ASO I mean it's another approach to -- it's -- instead of inhibiting the enzyme with a small molecule, you reduce the levels of LRRK2, and it remains to be seen. One thing I'll say about the ASO is that at CNS, because we give it intrathecally, it's only going to affect LRRK2 in the central nervous system, whereas a small molecule may have effects on the enzyme in other places. But I would say other than that, it's kind of early days for whether or not these drugs will be effective.

And in terms of anti-LINGO, the Phase II study that we're doing now is different from the first Phase II study in the sense that we selected patients based on advanced imaging to be sure that they actually had demyelination based on MTR and actually had intact axons based on DTI. We also chose the dose that looked the most promising based on the first Phase II study. And we're combining it with multiple different kinds of immunomodulators. In the first trial, we only combined it with interferon, but now we're combining it with TECFIDERA and TYSABRI as well as interferon to see whether or not the level of inflammatory disease in the brain affects remyelination. And perhaps when you have less inflammation, the oligodendrocyte precursor cells may be able to remyelinate better. So that's the difference, and we'll find out soon whether or not the second trial is positive.

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Operator [30]

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

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Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [31]

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Congrats on a successful 2019. Could you elaborate on the rationale for studying BAN2401 in patients whose amyloid levels fall below the threshold of positivity? And is the goal here to create a complementary positioning for BAN2401 in patient segments that would be distinct from aducanumab?

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Alfred W. Sandrock, Biogen Inc. - Executive VP of Research & Development and Chief Medical Officer [32]

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Well, we do view this -- we do view the 2 drugs as part of a multidrug franchise, and we will use the drugs where they naturally fit the best and we'll need data for that. Just because they're not positive based on a visual read, that doesn't mean there's no amyloid accumulation. So I think that's a distinction. And in some ways, the A345 study looks at -- between the 2 studies, looks a both Stage 1 and Stage 2, both of the -- both stages as defined by the FDA guidance document that came out last year on the various stages of Alzheimer's disease. So I would say that those 2 studies evaluate both Stage 1 and Stage 2 and both are important to study, I believe.

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Joe Mara, Biogen Inc. - VP of Finance and Head of IR [33]

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There's probably time for 2 more questions.

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Operator [34]

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Your next question will come from the line of Evan Seigerman with Crédit Suisse.

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Evan David Seigerman, Crédit Suisse AG, Research Division - VP & Senior Equity Research Analyst [35]

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Congrats on the quarter. Just looking towards next week with potential results from the IPR. If they were to not go your way, would you consider reprioritizing your business development priorities versus share repurchases? Or would you have to wait until you kind of see the results of the court cases midyear?

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Michel Vounatsos, Biogen Inc. - CEO & Director [36]

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So thanks for the good question and we see business development, M&A opportunities as being independent from what happens next week or what happened 6 months ago, in March. We continue to remain -- we are very engaged on BD opportunities, and the team continue to look at the opportunities to create value for the shareholders. And this will be independent from any end.

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Jeffrey D. Capello, Biogen Inc. - Executive VP & CFO [37]

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Yes. And just as a reminder, we ended the year with no net debt. And in 2019, we generated $7 billion in -- on cash flow. So we've got the capacity to do both.

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Operator [38]

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The final question will come from the line of Robyn Karnauskas with SunTrust.

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Robyn Kay Shelton Karnauskas, SunTrust Robinson Humphrey, Inc., Research Division - Research Analyst [39]

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Just to give us some comfort, as like investors and we think about Alzheimer's, should it be approved, given that you're giving a huge amount of antibody. Can you give us any comfort around cost of goods and margins that it wouldn't be too harmful? I know you guys have very good manufacturing capacity, but that's still a lot of antibodies. So when would we learn this? And can you give us any comfort that the dollar amount to make this drug isn't extremely high that it would overburden the system?

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Jeffrey D. Capello, Biogen Inc. - Executive VP & CFO [40]

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Yes. So thanks for the question. So it's obviously something we've been looking at for a while. And all I'll say, I don't want to get into too much specifics with regard to that at this point in time, but we're comfortable that given the nature of the substance that we'll produce, it will be a fair margin, and it will do well economically.

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Joe Mara, Biogen Inc. - VP of Finance and Head of IR [41]

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So I'm going to turn it back over to Michel for his closing comments.

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Michel Vounatsos, Biogen Inc. - CEO & Director [42]

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So thank you all for being on the call. We turned the page of a very strong 2019, and now the team at Biogen is ready for a very material 2020, and obviously, with a priority for a potential aducanumab. Thank you for your attention.

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Joe Mara, Biogen Inc. - VP of Finance and Head of IR [43]

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Thank you. End the call.

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Operator [44]

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Thank you again for joining today's conference. You may now disconnect.