BIOGEN Earningcall Transcript Of Q2 of 2024

chief financial officer; and we'll be introducing Dr.

Travis Murdoch from HI-Bio on the call. We'll make some opening comments, and then we'll move to

the Q&A session and to allow us to get through as many questions as possible we ask that you limit

yourself to one question. With that, I'll now turn the call over to Chris. 

Christopher Viehbacher -- President and Chief Executive Officer

Thanks, Chuck. We got a lot to cover this morning. But first, in addition to our regular team, Priya,

Alisha and Mike, I'd like to welcome a new member to our team, Dr. Travis Murdoch.

Travis  is  a  physician  who  trained  as  a  gastroenterologist  and  then  studied  immunology  as  a  road

scholar  at  Oxford.  Following  a  career  at  McKinsey,  Third  Rock  and  SoftBank,  he  became  the

Founder  and  CEO  of  HI-Bio.  I'm  pleased  to  welcome  Travis  and  the  HI-Bio  team  to  Biogen.  Now

have, again, a presence on the West Coast and the HI-Bio team working in collaboration with their

Biogen colleagues on the East Coast will drive forward the development of felzartamab.

So  we're  announcing  really  strong  quarterly  results  this  morning,  but  I  would  say  this  is  really  a

quarter that has lasted 18 months. I think we're -- the results we're presenting really reflect the hard

work of Team Biogen to transform our company. 18 months ago, we were a company that had been

declining for four years in revenue and profit. And we have been working pretty tirelessly for the last

18 months to really turn that around and create a new future for ourselves.

At the Q4 earnings in February of 2023 we outlined five priorities. The first one was focus on new

launches. Second was to reduce our cost base and align resources with growth opportunities. Third

was  to  focus  our  investments  in  R&D  on  the  most  promising  assets  and  improve  the  risk-reward

profile.

Four was to optimize our existing portfolio and five was external growth. We've had a few setbacks

along the way. But nonetheless, I think the results today really show that Biogen has done what it

said it would do. And that, to me, has been always important in business.

So if I take each one of those. I think if we look at our new product launches, all of the launches are

either  in  line  or  ahead  of  expectations.  I'm  particularly  happy  to  see  the  very  strong  results  for

Leqembi,  not  only  in  the  U.S.,  but  there's  been  a  very  successful  launch  in  Japan.  And  the  early

data from China are also extremely promising, and Alisha will talk more about that. Last year, we set

out to reduce our cost base, and we are more than on track on delivering on those results, and you

can see that in the not only the reduction in opex, but the very strong improvement in margins, and

Mike will talk about that.

But one of the things that you don't see in the P&L that I'm particularly proud of is although we've

really  reduced  our  cost  base  and  improved  our  margins,  we  have  invested  massively  where  we

need to for growth opportunities, both in Leqembi and the other launches but also on really trying to

turbocharge  some  of  the  key  assets  in  R&D.  And  Priya  will  talk  more  about  that,  but  one  of  the

beneficiaries  of  that  is  BIIB080  and  another  one  is  Litifilimab.  We  also  have  --  although  we  have

seen  a  declining  MS  portfolio  due  to  increased  competition,  particularly  from  biosimilars  and  from

generics, we still had a number of products where we still had long patent protection. And one was

Spinraza.

And  I  think  we've  seen  some  very  good  performance.  This  is  a  very  competitive  space.  And

Spinraza has been able to hold its own. I think when I first joined the company, most people were

predicting the decline of that.

Today, I would say the bumpiness tends to be in some countries where we only ship every now and

then.  I  think  in  Russia,  for  example,  we  do  one  shipment  per  year.  So  that  business  has  always

been a little bit bumpy. But if you look at market share, I think Spinraza has done extremely well.

And I'm very pleased to see Vumerity growing at double digits again now in the U.S. This is the only

patent  protected  product  in  the  oral  segment  of  MS.  And  we  see  an  awful  lot  of  movement  in  the

injectable part, but the oral segment has stayed pretty much constant, and it's a great opportunity,

and I'm glad to see Alisha and her team really taking advantage of that. And then we always said we

were going to be open to external growth.

And  I  think  the  Reata  transaction  last  year  is  really  starting  to  pay  dividends.  We're  seeing  a  very

strong launch not only in the U.S., but now also in Europe. As you know, we tend to get patients on

access programs and then the reimbursement follows. But we are expecting to be approved in 20

countries by the end of this year.

And  I  think  we're  extremely  happy  with  that.  Zurzuvae  addresses  a  huge  unmet  need,  and  that

launch is also well in excess of ex patients. So as I sit here today, I would say the results that you're

seeing are not, as I say, just the results of what we've done in the second quarter. But really, I think

we're  putting  up  scores  on  the  scoreboard  here  that  really  now  are  starting  to  demonstrate  all  of

those initiatives that we put in place last year, and we're starting to deliver on them.

Now  of  course,  we're  not  done  yet.  And  I  think  there's  a  real  opportunity  to  continue  to  develop  a

sustainable  growth  platform  and  we'll  do  that  in  two  ways.  The  first  is  really  now  that  we  have

prioritized R&D. I see the Alzheimer's portfolio as being a core franchise for us for the coming years.

We're  obviously  continuing  to  invest  heavily  in  Leqembi  with  the  maintenance  indication,  the

subcutaneous. But also, I think the AHEAD study, if we can really get the evidence that it will really

demonstrate the importance of early treatment. Priya will talk about it, but the 36-month data that we

showed  at  AAIC  this  week  are  extremely  important  for  the  future  growth  of  Leqembi  but  we've

always  known  there'll  be  other  modalities.  And  I  think  tau  is  emerging  as  an  extremely  important

modality for the treatment of Alzheimer's.

And  I  think  Biogen  is  a  clear  leader  in  that,  and  again,  Priya  will  say  more  about  that.  We're  also

seeing an emerging lupus portfolio. We'll have a readout later this year with dapirolizumab that we

share with UCB. But we're quite excited about litifilimab, both for SLE as well as cutaneous lupus.

And we add another element to the lupus portfolio with Felza because that is actually in Phase I for

lupus  nephritis.  And  to  me,  and  Travis  will  go  into  this  more,  but  the  acquisition  of  HI-Bio  is

extremely  important  for  our  longer-term  growth  outlook.  This  is  an  opportunity  to  present  a  set  of

opportunities that have a different risk bed profile. We have very strong Phase II results, which gives

us a whole lot more confidence in Phase III results than some of the other assets that we have in

our portfolio.

Neuroscience  is  in  an  area  of  a  very  important  unmet  need,  but  it's  also  one  of  the  riskiest  and

hardest areas. And so I think we get a little bit more balance in our portfolio by pursuing things in

immunology  and  so  I  personally  am  extremely  excited  about  Felza  and  what  Travis  and  his  team

can do. The other access to this is we're going to continue to look at business development. I think

you have seen that we're pretty disciplined.

I think that both of the acquisitions that we've done so far with Reata and HI-Bio will drive an awful

lot of shareholder value, and that is certainly top of mind as we look at business development. So I

think Biogen is in a much different place than we were 18 months ago. We still have a number of

challenges like any other company, I think we're really positioned for longer-term growth now at the

company.  And  with  that,  I'd  like  to  turn  it  over  to  Alisha  to  give  us  a  little  more  color  on  the

successful launches.

Alisha Alaimo -- President, Head of North America

Thank  you,  Chris,  and  good  morning,  everyone.  Thank  you  for  joining  the  call  today.  Today,  I'll

provide  our  perspective  on  the  progress  of  Leqembi,  Skyclarys  and  Zurzuvae.  So  I  will  begin  with

the Alzheimer's market.

We believe we're continuing to build momentum with more health systems across the country now

having  the  capability  to  treat  a  higher  volume  of  Alzheimer's  patients.  And  in  Q2,  we  saw  these

promising  trends  continue  newly  we  sustained  new  patient  growth.  Nearly  40%  of  all  commercial

patients on therapy since launch started treatment during Q2. The number of physicians prescribing

Leqembi also grew by 50%.

And  depth  of  ordering  at  our  Priority  100  IDNs  continued  to  accelerate  and  the  total  order  volume

more than doubled again in Q2 compared to Q1. It's important to know that based on the data we've

seen  to  date,  these  trends  continued  into  the  first  weeks  of  July,  demonstrating  that  we  are

sustaining  launch  progress.  We  also  believe  we're  seeing  positive  signals  that  health  system

capacity may be increasing. For example, last quarter, I described how some IDNS are expanding

and extending their sites of care.

Through Q2, nearly 70% of the activated Priority 100 IDN expanded beyond their flagship sites to

treat patients at their child sites. And we have seen this dynamic play out beyond the priority IDN as

well.  We  believe  this  growing  real-world  experience  with  Leqembi  efficacy  and  safety  further

strengthens  its  unique  profile  in  a  newly  competitive  market.  Specifically,  some  HCP  share  that

because Leqembi was studied in the broadest and most diverse population of any anti-amyloid drug

to  date,  it  removes  some  of  the  complex  considerations  about  which  potential  patients  are

appropriate for Alzheimer's treatments.

Alzheimer's  is  a  chronic  degenerative  and  fatal  disease  that  does  not  stop  even  after  plaque  is

removed.  In  fact,  our  long-term  data  show  that  patients  who  stopped  Leqembi  treatment

experienced  rapid  reaccumulation  of  key  plasma  biomarkers  that  indicate  Alzheimer's  disease

biology  was  returning.  Importantly,  the  rate  of  decline  in  most  patients  who  stopped  therapy  were

verted to the rate of decline observed in patients who took placebo, which is why we believe patients

deserve a therapy with a benefit risk profile that enables them to remain on treatment to say ahead

of  disease  progression  even  after  removing  plaques  by  preventing  ongoing  damage  and  plaque

buildup. Recent data that Priya will describe reinforces that in patients with three years of continuous

treatment Leqembi showed continued benefits.

And  finally,  there  are  no  head-to-head  studies  comparing  the  available  therapies.  The  FDA  has

been  clear  that  the  incidents  and  timing  of  ARIA  vary  among  drugs  in  this  class.  Observed  ARIA

rates  in  patients  who  received  Leqembi  were  the  lowest  reported  among  any  Phase  III  trial  for  a

drug  with  traditional  FDA  approval  in  the  class  with  Leqembi  rates  nearly  50%  lower.  To  reinforce

Leqembi's  unique  profile  with  our  customers,  Biogen  deployed  our  expanded  field  force  just  last

month.

This  team  increases  our  focus  and  frequency,  engaging  with  high-value  sites  and  expands  our

reach  to  30%  more  HCPs.  We've  been  receiving  positive  feedback  since  the  launch  of  this  team.

Biogen's  field  force  is  working  even  more  closely  with  our  partner,  Eisai,  and  we  believe  this  is

deepening our customer insights, and we will enable accelerated growth. We're encouraged by two

strong quarters of growth and the sustained progress in July, and we look forward to providing more

support to the healthcare community and people living with Alzheimer's disease.

Now moving on to the Skyclarys update, where we continue our strong launch momentum reaching

more Friedreich ataxia patients globally. In the second quarter, we delivered $100 million in revenue

globally and remain ahead of our internal expectations. Europe launch is ahead of internal forecast

and  along  with  Rest  of  World,  builds  on  the  success  in  the  U.S.  Skyclarys  is  now  available  in  12

markets  outside  the  U.S.,  including  the  EU,  where  we  are  initiating  new  patients  in  the  catch-up

population.

These  patients  and  their  HCPs  are  highly  engaged  in  their  care  and  often  awaiting  Skyclarys

approval as is typical for rare disease launches. In the U.S., we have moved beyond the catch-up

population as Skyclarys has been in market for more than a year. The team continues to leverage

our strong rare disease capabilities and we are encouraged by the early results of engaging patients

and physicians in this next phase. In Q2, roughly one-third of new patient start forms came from new

writers  tied  to  our  AI  program  which  analyzes  hundreds  of  thousands  of  de-identified  patient

journeys.

This includes a meaningful share from community neurologists and PCPs. Globally, our outlook in

FA  is  promising  in  both  the  short  and  long  term.  We  anticipate  driving  strong  growth  by  making

Skyclarys  available  in  additional  geographies,  potential  expansion  into  pediatric  populations  and

with our years of experience identifying patients, we believe we can help. Turning to Zurzuvae, we

continue to outperform our expectations in the first six months of launch.

We saw strong growth in the second quarter with U.S. revenue growing 19% and patient demand

nearly  doubling  versus  the  first  quarter.  OB-GYNs  continue  to  lead  prescribing  and  patients  are

sharing positive early experiences with their physicians and on social media platforms. Based on our

recent  market  research,  we  believe  we've  achieved  higher-than-average  aided  awareness  of

Zurzuvae  among  providers,  outperforming  messaging  recall  analogs  in  the  women's  health  and

psychiatry markets.

To  achieve  the  next  phase  of  growth  and  advance  our  vision  to  transform  the  care  of  postpartum

depression, we are working to more deeply understand how to realize the patient opportunity in this

market and drive real behavior change. In conclusion, while each launch is unique, we are pleased

that we remain on track or ahead of our expectations across all three therapies. We know we have

more work to do to help people living with Alzheimer's, Friedreich ataxia and postpartum depression,

and we are working with urgency to help these patient communities. I will now pass to Priya.

Priya Singhal -- Executive Vice President, Head of Development, and Interim Chief Medical Officer

Thank  you,  Alisha.  Over  the  last  year,  we  have  focused  heavily  on  reviewing  our  existing  pipeline

with  an  eye  toward  improving  its  risk  profile.  The  focus  now  is  on  building  the  pipeline  through  a

combination  of  both  internal  and  external  opportunities  with  an  eye  toward  risk  diversification  and

creating value. We also remain focused on investing to win in Alzheimer's disease where we believe

we have a differentiated product in Leqembi as well as an industry-leading R&D pipeline of potential

next-generation therapies.

Beginning  with  Leqembi.  Leqembi  is  the  only  approved  anti-amyloid  antibody  with.  First,  a  dual

mechanism of action, targeting both amyloid planks and highly toxic protocol. Second, clinical date

crossed the full early Alzheimer's disease population, including individuals with no and low tow.

And third, extensive real-world evidence. Importantly, as Alisha mentioned, Alzheimer's disease is a

chronic  progressive  disease  and  with  the  dual  action  of  Leqembi  and  the  option  for  continued

treatment  is  a  unique  advantage  for  patients  looking  to  maintain  or  further  clinical  benefit.  To  this

point, at AAIC earlier this week, Eisai presented three-year data from the Phase III CLARITY study

and  its  open-label  extension,  which  shows  continued  clinical  benefit  with  longer  duration  Leqembi

treatment. Shown on the left, this includes data from the early start group or individuals who started

Leqembi during the 18-month placebo-controlled portion of the study.

Delayed start group or patients from the placebo arm who switched over to Leqembi at the start of

the openable extension as well as a baseline matched natural history cohort from ADNI. The early

start  group  shows  that  three  years  of  continuous  Leqembi  treatment  reduced  clinical  decline  by

negative  0.95  on  CDR  sub  of  boxes  as  compared  to  the  natural  history  cohort,  resulting  in  a

clinically  meaningful  benefit  for  early  AD  patients.  This  represents  an  expansion  of  the  benefit

observed at 18 months. It is very important to keep in mind that a change from 0.5 to 1 on the CDR

score  domains  of  memory,  community  affairs,  home  and  hobbies  is  the  difference  between  slight

impairment and loss of independence.

We  believe  these  results  are  significant  as  the  majority  of  individuals  approximately  70%  had

already  successfully  cleared  block  by  the  18-month  time  point.  Furthermore,  data  from  the

Lecanemab Phase II study shown on the right, which included a treatment gap of approximately two

years  on  average  shows  that  Alzheimer's  disease  continues  to  progress  when  treatment  is  soft  or

interrupted  even  after  blocks  are  removed.  Also  at  AIC,  Eisai  presented  data  which  showed  that

51%  of  patients  in  the  Clarity  AD  study  with  either  no  or  low  tau  representing  an  early  stage  of

Alzheimer's  showed  improvement  from  baseline  in  cognition  and  function  over  a  three-year  period

as  assessed  by  CDR-Sum  of  Boxes.  Taken  together,  these  data  suggest  that  earlier  initiation  of

treatment with Lecanemab may have a significant positive impact on disease progression and may

provide continued benefits to patients with early Alzheimer's disease over the long term.

We  continue  to  focus  our  efforts  on  Leqembi  with  a  goal  of  characterizing  dosing  for  its  long-term

benefit,  providing  optionality  with  subcutaneous  formulation  as  well  as  evaluating  its  role  in

preclinical  AD  population,  as  Chris  mentioned.  Lastly,  while  we  were  disappointed  to  learn  that

Lecanemab received a negative opinion from the CHMP, we believe that the clinical data supports a

clear favorable benefit risk profile with a meaningful clinical benefit patients. Furthermore, thousands

of patients have now been treated with Lecanemab globally providing further real-world evidence on

the  efficacy  and  manageable  safety  profile.  We  are  continuing  to  work  with  Eisai  as  they  plan  to

request  a  reexamination  of  the  EU  filing  as  we  work  to  enable  access  for  people  suffering  from

Alzheimer's globally.

We continue to also invest in our broader Alzheimer's pipeline, including our investigational anti-tau

ASO BIIB080 based on the encouraging data from the Phase Ib study, we have now implemented a

protocol  amendment  for  the  ongoing  Phase  II  CLIA  study  with  the  aim  of  accelerating  a  potential

proof-of-concept  outcome.  We  are  excited  that  this  amendment,  combined  with  the  robust

enrollment  trends  observed  to  date  may  enable  a  readout  in  2026.  Beyond  amyloid  and  tau  and

under  Jane's  guidance  in  research,  we  are  advancing  a  preclinical  AD  pipeline  encompasses

diverse targets and modalities, including active transport approaches. As communicated today in our

earnings release, we decided to exit the ATV A beta collaboration with Denali.

We continue to see merit in modalities that can actively transport therapeutic agents into the brain,

and we continue to prioritize these efforts as we work to build upon our existing leadership in AD.

Looking back over the last few months, while we discontinued three mid-stage products based on

readouts, we continue to make progress across several other areas of our pipeline. The first patient

has  received  a  dose  of  Skyclarys  in  Biogen's  Phase  I  dose-finding  study  for  pediatric  Friedreich's

ataxia. This is the first step in potentially expanding Skyclarys access to the pediatric population.

And  once  a  dose  is  identified,  we  plan  to  conduct  a  Phase  III  study  to  assess  the  benefit  risk  in

pediatric patients. We also expect the DEVOTE study evaluating high-dose Spinraza to read out in

this second half of the year. We have also made meaningful progress in immunology where the first

patient was dosed in the litifilimab Phase III portion of the operationally seamless Phase II/III AMITA

study in CLE following the completion of the Phase II enrollment. As Chris mentioned, we continue

to  view  immunology  as  a  significant  potential  driver  of  Biogen's  future  growth  and  the  recent

acquisition of HI-Bio is an example of this importance.

With that, I would like to hand over the call to Travis who will dive a bit deeper into felzartamab.

Travis Murdoch Dr. -- Founder and Chief Executive Officer, HI-Bio Inc.

Thank you, Priya. I'm very excited to be here speaking today as part of the Biogen team. I believe

we  have  a  unique  opportunity  to  combine  HI-Bio's  expertise  in  immune-mediated  indications  with

Biogen's  global  development  and  commercial  experience  in  specialized  immunology  and  rare

diseases. I believe this synergy will have significant benefit as we work to accelerate our lead asset,

Felzartamab or Felza, into late-stage development.

As  the  other  CD38  antibody,  we  believe  Felzartamab  is  a  differentiated  molecular  design  that

specifically  target  and  deplete  plasma  cells  responsible  for  producing  pathogenic  antibodies  while

sparing the broader B-cell lineage. This is different from other programs currently in development for

antibio diseases that more broadly impact B cells. Compared to other mechanisms, we believe the

specificity of Felzartamab allow for a differentiated and more desirable clinical profile characterized

by more durable efficacy and improved safety profile. As Chris mentioned, one of Biogen's goals is

to  optimize  the  risk  reward  of  the  pipeline,  but  I  believe  the  acquisition  of  Felza  significantly

advances that effort.

Through  a  cell  depletion  approach,  Felza  has  already  demonstrated  clinical  peripheral  concept

across  multiple  rare  immunology  indications.  Antibody-mediated  rejection,  AMR,  IgA  nephropathy

IgAN  and  primary  memory  nephropathy  or  PMN  are  serious  conditions  that  lead  to  severe

consequences  for  patients,  such  as  transplant  failure  or  end-stage  kidney  disease  and  available

treatment  options  leaves  significant  unmet  need,  and  so  we  see  significant  potential  commercial

opportunity  here.  Now  I'd  like  to  briefly  review  the  felza  data  generated  to  date  across  these

indications to highlight the potential value we see for patients. AMR is the leading cause of kidney

transplant loss in the U.S.

with  no  approved  treatments  and  prior  investigational  agents  have  not  demonstrated  significant

resolution of AMR biopsy. The consequences here can be dire, ending with graft failure dialysis and

the need for retransplantation in many cases. In the Phase II study, which we published in the New

England Journal of Medicine, nine doses of felza IV administered over a five-month period resulted

in  greater  than  80%  AMR  resolution  at  week  24  versus  20%  for  the  placebo  group.  Furthermore,

two-thirds of responders maintained AMR resolution out to 52 weeks.

So  we  believe  these  results,  if  replicated  in  a  registrational  study  are  potentially  transformative  for

this disease. Next, I'd like to discuss IgA nephropathy or IgAN, which is the most prevalent chronic

glomerular  disease  worldwide  and  another  indication  where  we  believe  felza  has  the  potential  to

deliver  a  treatment  option  for  patients  with  important  differentiation.  Felza  directly  depletes  CD38

positive  plasma  cells.  The  producers  of  both  galactose  deficient  IgA1  and  its  auto  antibody  which

are believed to be the most upstream causes of IgAN.

As shown here on the slide, cells of treatment resulted in durable reductions in IgA up to 24 months,

which  is  more  than  18  months  after  the  last  dose.  Importantly,  this  pharmacodynamic  effect  was

selective  for  IgA  with  IgG  and  IgM  levels  rebounding  to  baseline  after  the  completion  of  the  five

months  felza  the  treatment.  These  results,  paired  with  the  emerging  clinical  efficacy  data  suggest

that cells that can have a durable selective effect on IgA and thus impact IgAN disease biology while

potentially  allowing  for  the  maintenance  of  general  protective  immunity  conferred  by  IgG  and  IgM

antibodies  over  a  prolonged  period  off  there.  Similar  to  the  effects  showed  a  durable  reduction  in

proteinuria as measured by PCR.

Specifically, we saw there was a dose-dependent reduction in the PCR, durable out to the 24-month

time  point.  Now  in  terms  of  potential  differentiation,  it's  important  to  note  that  this  improvement  is

after  more  than  18  months  of  being  off  therapy,  supporting  the  potential  for  felza  to  be  the  first

nonchronic treatment option again. Furthermore, in line with the selective targeting of plasma cells,

administration of felza is generally well tolerated with the safety profile consistent with prior studies.

We  believe  these  interim  results  potentially  provide  for  a  wide  therapeutic  window  and  may

ultimately lower the risk of chronic immunosuppression which could be a significant benefit for IgAN

patients.

Moving to PMN. So this is a severe antibody mediated disease of the kidney that's a leading cause

of nephrotic syndrome, which is a severe syndrome resulting from excretion of too much protein in

the  urine  and  which  causes  symptoms  such  as  swelling,  fatigue  and  increased  risk  of  infection.

Current  standard  of  care,  which  includes  immunosuppressive  and  chemotherapeutic  agents,  has

proven  insufficient  as  40%  of  patients  do  not  achieve  remission  in  many  progress  to  and  chase

kidney  disease.  It's  estimated  that  up  to  80%  of  patients  with  TMN  have  autoantibodies  against

PLA2R,  which  is  a  kidney  antigen  and  which  provides  us  with  a  key  biomarker,  both  for  patient

stratification as well as treatment response.

In  the  Phase  II  M-PLACE  study,  which  evaluated  felza  in  both  newly  diagnosed  and  relapsed

patients,  as  well  as  patients  refractory  immunosuppressive  therapies,  a  24-week  felza  a  treatment

resulted in rapid, deep and durable reduction in anti-PLA2R antibodies in both patient cohorts at the

1-year time point. Many patients retained neurologic complete response more than six months after

the last dose of felza, which highlights the durability of felza's treatment effect. Importantly, the effect

on anti-PLA2R was mirrored when examining reductions in premieria. And in line with prior studies

of felza, TEAEs were generally mild or moderate in severity.

Based  on  these  results,  we  believe  that  felza  have  the  potential  to  provide  a  meaningful  new

treatment  for  patients  suffering  with  PMS.  In  summary,  we  believe  the  data  generated  to  date

highlights  the  potential  for  felza  to  be  a  best-in-class  treatment  option  across  multiple  serious

immunologic diseases with significant unmet need. Phase II data across AMR, IgAN and PMN have

provided proof of contract and highlighted a potentially differentiated clinical profile on the basis of

efficacy, treatment durability and safety. I'm looking forward now to combining the strengths of the

joint HI-Bio and Biogen team as we work to incorporate these learnings and further refine our Phase

III plan.

Now we expect to initiate Phase III studies across AMR, IgAN and PMN next year, beginning with

AMR in the first half of the year. I'd now like to pass the call over to Mike for a financial update.

Michael R. McDonnell -- Chief Financial Officer

Thank you, Travis, and good morning, good afternoon to everyone. I'd like to start by acknowledging

the entire Biogen team for a strong second quarter. I'm pleased to provide some color on the results,

and  please  note  that  all  the  comparisons  that  I  will  make  are  versus  the  second  quarter  of  2023.

Total revenue of $2.5 billion was up marginally versus the prior year at actual currency and grew 1%

at constant currency.

But  importantly,  we  grew  our  core  pharmaceutical  revenue  5%  at  actual  currency  and  6%  at

constant currency. This was driven by the performance of our four recent launches, which more than

offset  the  revenue  decline  in  our  MS  business.  Non-GAAP  diluted  EPS  grew  31%  to  $5.28  and

included a onetime benefit of $0.52 from the sale of one of our two priority review vouchers. Absent

the PRV sale, non-GAAP EPS would have grown 18% to $4.76.

We  also  reported  a  43%  improvement  in  non-GAAP  operating  income  which  was  a  30%

improvement, excluding the PRV sales. We continue to benefit from our R&D prioritization and Fit

for Growth initiatives, where I'll provide more detail in a moment. We are pleased to be raising our

full year 2024 guidance range. And in just a few moments, I will also provide some additional details

on our guidance.

Now  a  bit  more  color  on  our  revenue  for  the  second  quarter.  Our  MS  franchise  revenue  declined

approximately  5%  in  the  quarter,  and  there  are  a  few  dynamics  in  this  business  that  are  worth

highlighting. First, we continue the erosion of our interferon business as the entire class is seeing a

shift  to  higher  efficacy  or  oral  therapies.  Regarding  Tecfidera  in  the  EU,  we  have  now  seen  most

generics exit the market, which helped drive U.S.

growth  of  11%  at  actual  currency  and  12%  at  constant  currency  to  $208  million  this  quarter.  We

continue  to  believe  that  we  are  entitled  to  market  protection  in  the  EU  until  February  of  2025.

Vumerity  had  its  best  quarter  since  launch  as  global  revenue  grew  13%  at  actual  and  constant

currency  to  $166  million.  Vumerity  remains  the  number  one  branded  oil  in  terms  of  share  in  the

United States.

U.S. TYSABRI revenue of $249 million declined 4% and benefited from the timing of shipments in

the quarter, which was offset by declines due to competition within the high-efficacy class. Next, our

rare  disease  franchise  produced  revenue  of  $534  million  and  that  represented  growth  of  22%  at

actual currency and 25% at constant currency. Skyclarys global revenue was $100 million.

Full  Spinraza  revenue  of  $429  million  declined  2%  at  actual  currency  and  was  flat  at  constant

currency.  U.S.  revenue  was  up  1%  to  $157  million  and  we  remain  encouraged  by  the  resilience

here.  And  on  Leqembi,  we  saw  significant  sequential  growth  with  second  quarter  global  in-market

sales booked by Eisai of approximately $40 million which included $30 million of U.S.

in market sales. I'll turn now to a few comments on expenses. We continue to see lower non-GAAP

cost  of  sales  as  a  percentage  of  revenue  which  was  driven  by  a  more  favorable  product  mix.

Notably, growth in Skyclarys replacing lower margin contract manufacturing revenue.

We also had no IC charges during the quarter versus $34 million in the second quarter of 2023. As

mentioned previously, our R&D prioritization and Fit for Growth programs have begun to significantly

improve  our  profitability.  Second  quarter  non-GAAP  R&D  expense  decreased  from  the  second

quarter  of  2023  by  $120  million  or  21%  as  we  continue  to  focus  our  spend  on  programs  with  the

highest probability of success. Non-GAAP SG&A expense increased 1% in the second quarter.

We  have  significantly  reduced  selling  costs  for  legacy  products  and  so  significantly  reduced  our

general  and  administrative  cost  base  which  has  allowed  us  to  absorb  most  of  the  approximately

$100 million of Q2 2024 incremental launch costs for Leqembi and Skyclarys. Now a brief update on

our balance sheet. We ended the second quarter with $1.9 billion of cash and marketable securities.

As a reminder, we utilized $1.15 billion of this balance in July when we closed the HI-Bio acquisition.

We ended the quarter with approximately $4.4 billion of net debt. During the quarter, we fully repaid

the  remaining  balance  of  the  $1  billion  term  loan  that  we  put  in  place  at  the  time  of  the  Reata

acquisition. And we continued to generate strong cash flow in the second quarter of approximately

$592 million of free cash flow, which brings us to approximately $1.1 billion of free cash flow in the

first half of 2024. We continue to believe that our balance sheet has the capacity for us to invest in

both internal and external growth opportunities.

Turning  now  to  guidance.  We're  pleased  that  the  operating  performance  of  the  business

year-to-date  supports  raising  our  full  year  2024  non-GAAP  diluted  EPS  guidance  from  a  previous

range of $15 to $16 to a new range of between $15.75 to $16.25. This new range reflects expected

growth of approximately 9% at the midpoint of the range compared to the full year of 2023. I would

like  to  highlight  several  important  things  to  remember  for  the  second  half  of  2024  as  you  hit  your

models.

In  terms  of  revenue,  with  our  key  products  all  performing  generally  in  line  or  slightly  ahead  of

expectations, there is a slight increase to the previous expectations for the year. We now expect full

year  total  revenue  to  decline  by  a  low  single-digit  percentage  when  compared  to  2023.  We  also

expect  core  pharmaceutical  revenue  to  be  roughly  flat  year  over  year  as  recent  launches  are

expected to progress and provide an offset to some key potential dynamics in the second half of the

year.  These  include  expected  continued  pressure  on  our  MS  franchise  which  incorporates  the

potential for a biosimilar entrant in the U.S.

for  TYSABRI,  and  we  continue  to  monitor  the  timing  of  shipments  for  Spinraza  in  certain  ex-U.S.

markets. Next, the sale of one of our two priority review vouchers is a nonrecurring item. And since

we expect to reinvest the proceeds of the sale and growth initiatives later this year, we do not expect

this benefit to impact our full year EPS.

Also some key points to consider regarding our operating expenses. In the second half of the year,

we expect to continue to ramp launch spending on our new product launches. This will include the

30%  increase  in  the  Leqembi  field  force,  which  is  coming  online  as  well  as  additional  spend  for

some targeted direct-to-consumer campaigns. In addition, we expect incremental opex primarily on

the  R&D  line  of  approximately  $50  million  in  the  back  half  of  the  year  related  to  HI-Bio  as  we

execute plans on three potential Phase III starts.

We  continue  to  expect  full  year  2024  combined  non-GAAP  R&D  and  SG&A  expense  of

approximately $4.3 billion. We reported approximately $2 billion of spend in the first half of the year,

implying higher spend in the second half of the year due to the reasons I just mentioned, along with

some typical phasing of expenses throughout the year. I would also note that we now expect 2024

operating  income  to  grow  at  a  mid-  to  high  teen  percentage  versus  the  previous  guide  of  a  low

double-digit percent growth. This improvement factors in higher expenses in the second half of the

year  versus  the  first  half  of  the  year,  partially  offset  by  higher  revenue  due  to  our  new  product

launches.

I would remind you that we expect a reduction in interest income of approximately $20 million for the

remainder  of  2024,  and  this  is  due  to  lower  cash  balances  and  associated  lower  interest  income

resulting from the HI-Bio acquisition. As always, our guidance does not consider the impact from any

potential  acquisitions  or  large  business  development  transactions  or  pending  and  future  litigations

as  these  are  often  difficult  to  predict.  I  would  refer  to  you  to  our  press  release  for  other  important

guidance  assumptions.  And  just  before  we  open  it  up  for  Q&A,  I  wanted  to  provide  a  brief  update

regarding the strategic review of our biosimilars business.

After  a  comprehensive  review  of  potential  externalization  options  compared  to  retaining  the

business,  we  believe  that  the  best  value  for  shareholders  going  forward  is  to  retain  the  business

within our portfolio and to optimize the business with an aim to maximize profitability. And with that,

we will open up the call for questions.

Chuck Triano -- Head of Investor Relations

Thanks, Mike. Operator, please poll for questions.

Operator

Questions & Answers: