Biogen Inc. (BIIB) Q1 2021 Earnings Call Transcript

Biogen Inc. (NASDAQ: BIIB) Q1 2021 earnings call dated Apr. 22, 2021

Corporate Participants:

Mike Hencke — Director of Investor Relations

Michel Vounatsos — Chief Executive Officer

Alfred W. Sandrock — Head of Research and Development

Michael McDonnell — Chief Financial Officer

Analysts:

Michael Yee — Jefferies — Analyst

Ronny Gal — Bernstein — Analyst

Marc Goodman — SVB Leerink — Analyst

Yatin Suneja — Guggenheim Partners — Analyst

Umer Raffat — Evercore — Analyst

Matthew Harrison — Morgan Stanley — Analyst

Brian Abrahams — RBC Capital Markets — Analyst

Colin Bristow — UBS — Analyst

Evan Seigerman — Credit Suisse — Analyst

Jay Olson — Oppenheimer — Analyst

Geoff Meacham — Bank of America — Analyst

Sumant Kulkarni — Canaccord — Analyst

Presentation:

Operator

Good morning. My name is Ashley, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Biogen’s First Quarter Earnings Call and Financial Updates. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]

Thank you. I would now like to turn the conference over to Mr. Mike Hencke, Director, Investor Relations. Mr. Hencke, you may begin your conference.

Mike Hencke — Director of Investor Relations

Good morning, and welcome to Biogen’s first quarter 2021 earnings call. Before we begin, I encourage everyone to go to the Investors section of biogen.com to find the earnings release and related financial tables, including our GAAP financial measures and a reconciliation of the GAAP to non-GAAP financial measures that we will discuss today.

Our GAAP financials are provided in Tables 1 and 2, and Table 4 includes a reconciliation of our GAAP to non-GAAP financial results. We believe non-GAAP financial results better represent the ongoing economics of our business and reflect how we manage the business internally. We have also posted slides on our website that follow the discussions related to this call.

I would like to point out that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail.

On today’s call, I am joined by our Chief Executive Officer, Michel Vounatsos; Dr. Al Sandrock, Head of Research and Development; and our CFO, Mike McDonnell. As a reminder, during the Q&A portion of the call, we kindly ask that you limit yourselves to one question.

I will now turn the call over to Michel.

Michel Vounatsos — Chief Executive Officer

Good morning, everyone, and thank you for joining us.

With a strong focus on operational execution, we have continued to serve patients and advance our strategic priorities. While we know that 2021 will be a financial reset year for the company, we are pleased with our operational performance during Q1 with first quarter total revenues of $2.7 billion and first quarter non-GAAP EPS of $5.34. These results were driven by solid performance across MS, SMA and biosimilars, together with continued strong cost management.

We are ready to launch aducanumab in the US should we receive a regulatory approval, and we anticipate an FDA decision by the June 7 PDUFA date. If approved, aducanumab will be the first therapy to meaningfully change the course of Alzheimer’s disease and will represent a significant growth and value creation opportunity.

Our cross-functional team in the US has been working for months in preparation for the potential launch of aducanumab. We have identified and evaluated key sites of care that have the necessary infrastructure for Alzheimer’s patients. We believe that more than 600 of these sites will be ready to treat patients shortly after a potential approval. Our team is currently working to evaluate the capacity at these and other sites to absorb an influx of Alzheimer’s patients.

Together with SI, we were pleased to support UsAgainstAlzheimer’s in the development of BrainGuide, a platform, which is powered by Amazon Web Services. BrainGuide aims to increase brain health awareness and empower people to take action based upon responses to a memory questionnaire. We hope that BrainGuide along with our collaboration with Apple aiming to identify digital biomarkers of cognitive health will enable people to seek care sooner in order to maximize the benefits of treatment.

We are also working to ensure an equitable launch to facilitate broad access to aducanumab should it be approved, including underserved population, a critical issue that has been highlighted by the COVID-19 pandemic. I am pleased to announce that outside the US, we recently submitted additional regulatory filings in Brazil, Canada, Switzerland and Australia, adding to our earlier submissions in Europe and Japan.

Turning to our progress towards our strategic priorities. First, Q1 overall MS revenue, including OCREVUS royalties was $1.7 billion. Putting aside the entry of the TECFIDERA generic in the US, our broader MS business continued to demonstrate resilience and progress. Excluding TECFIDERA in the US, the number of patients on our MS products worldwide increased approximately 5% versus the prior year.

Importantly, in the current COVID-19 environment, we believe our MS products are well positioned versus the competition based on our current treatment guidelines. We were very pleased to see strong revenue growth for VUMERITY, which is now the number one oral MS product in terms of new prescriptions in the US. We believe this performance is a testament to a strong product profile and our team’s ability to execute well, validating our plan announced mid last year to accelerate the launch of VUMERITY. We are also excited that TECFIDERA recently received regulatory approval in China.

Furthermore, we continue to advance new approaches to help address the remaining unmet medical need in MS. This quarter, we launched an intramuscular formulation of PLEGRIDY in both the US and EU, which we believe offers an improved tolerability profile, and we obtained approval for subcutaneous administration of TYSABRI in EU with the first expected launch in Germany, while we await regulatory decision in the US. We also continued to advance the potential use of extended interval dosing for TYSABRI with important data expected in the middle of this year.

Second, SPINRAZA generated first quarter global revenues of $521 million. While SPINRAZA is facing competition in the US, which has been exacerbated by the impacts of COVID-19, we were encouraged to see that SPINRAZA’s discontinuation decreased versus Q4 of last year. Outside the US, SPINRAZA continued to perform very well with 13% revenue growth versus Q1 of last year. Overall, SPINRAZA remains the market-leading treatment for SMA, and we believe it will remain a foundation of care.

Third, our biosimilars business delivered revenue of $205 million. We are pleased with this performance as the continued impact of the COVID-19 pandemic has resulted in a slowdown in new treatment starts and reduced clinic capacity for immunology patients in Europe. We aim to continue to grow our biosimilars business and create additional financial headroom for innovation by launching new products. To that end, we recently announced a collaboration with Bio-Thera Solutions to develop and commercialize BAT1806, a proposed biosimilar referencing Actemra currently in Phase 3 development. Biogen will have the rights to commercialize BAT1806 globally in countries outside of China, which will expand our global biosimilars footprint.

Fourth, this quarter, we continued to meaningfully progress on our pipeline. We reported Phase 2 data in essential tremor and we expect seven additional mid-to-late stage readouts this year. Gene therapy represents a key area of focus for Biogen as we continue to pursue multiple modalities. To this end, we recently announced our plan to build a new state-of-the-art gene therapy manufacturing facility at our RTP site in North Carolina.

Fifth, our cash flow generation remained strong and continued to provide us with significant flexibility to allocate capital in Q1. We generated approximately $769 million in cash flow from operations and $676 million in free cash flow. As we have demonstrated in the past, we are committed to maximizing returns for our shareholders as we aim to bring innovative therapies to patients.

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

Alfred W. Sandrock — Head of Research and Development

Thank you, Michel, and good morning, everyone. As always, I’d like to start by thanking the Biogen team for their hard work, as we continue to advance our R&D programs. We achieved a number of key milestones this quarter, and we look forward to seven additional readouts anticipated this year, including pivotal trials in major depressive disorder, postpartum depression, ALS, and choroideremia.

Let me now turn to the advances we made across our pipeline in the first quarter. Starting with Alzheimer’s disease, as Michel mentioned, this quarter, we submitted additional regulatory filings for aducanumab in Brazil, Switzerland, Canada and Australia. Together with our prior filings in the US, EU, and Japan, we have now submitted filings in seven key geographies and continue to engage with regulators as they review the aducanumab’s data.

Turning to lecanemab or BAN2401. Our collaboration partner, Eisai, has recently enrolled the last patient in the Phase 3 Clarity study in early Alzheimer’s disease. We look forward to the readout in Q3 of next year.

Additionally, we plan to present detailed results from the Phase 1b study of BIIB080 in mild Alzheimer’s disease at the upcoming AAIC meeting later this year. BIIB080 is a tau targeted antisense oligonucleotide that aims to reduce the production of all forms of tau, both intracellular and extracellular. The Phase 1b study demonstrated that BIIB080 was generally well tolerated and resulted in a dose and time-dependent reduction from baseline in CSF total tau and phospho tau with durability of effect. We are currently finalizing plans to advance BIIB080 into a Phase 2 study in Alzheimer’s disease.

Moving to MS, we are presenting new data across our portfolio at the AAI meeting this week. An updated analysis of data from the TOUCH Prescribing Program of TYSABRI showed an 88% reduction in the risk of PML when used with extended interval dosing or EID as compared with standard interval dosing. This supports previous findings that showed that EID is associated with a lower incidence of PML.

We continue to generate state-of-the-art real world data through MS PATHS. In MS PATHS, Biogen is collaborating with 10 leading MS centers in the US and Europe to generate standardized quantitative data from a diverse MS patient population, as they are being seen in the clinic. More than 17,000 patients have been enrolled in MS PATHS to-date, and we aim to use quantitative measurements across a range of key clinical dimensions, high position MRI measurements of MS disease activity, patient reported data using a validated quality of life instrument, blood biomarkers such as neuro filament, and electronic health records to obtain a more holistic view of MS and gain insights on how currently approved drugs are affecting real world outcomes.

Moreover, with the use of modern analytical methods such as machine learning, we hope to make new discoveries about the key sub-types and stages of MS, as well as its pathogenesis. At the AAN meeting, we were showing data from the MS PATHS that showed that extended interval dosing of TYSABRI may maintain comparable efficacy to standard interval dosing as assessed by the rate of new or newly enlarging T2 lesions on MRI scans, quantified by advanced image analysis software which we developed in collaboration with Siemens. A prospective study of the efficacy of extended interval dosing is being assessed in the ongoing NOVA study from which we expect top line results around mid-year.

Also being presented at AAN another study leveraging data collected using MS PATHS demonstrated that TYSABRI can lead to clinically meaningful improvements in aspects of mental and social health as assessed by the Neuro-QoL, a validated instrument that evaluates physical, mental, and social effects reported by patients with neurological disorders. For 11 of the 12 domains tested, the adjusted rate of improvement was greater for patients treated with TYSABRI than for those treated with OCREVUS.

Also being presented at AAN is the first real world analysis of VUMERITY treated patients. The retrospective study of 160 patients found that overall persistence was high with 88% of individuals remaining on VUMERITY at eight months and that treatment discontinuation due to GI adverse events was low at 3.8%. These results follow a recent publication of EVOLVE-MS-2, a Phase 3 five-week randomized multicenter study that assess the GI tolerability of VUMERITY and TECFIDERA using self-administered questionnaires. The study demonstrated that only 9.5% of VUMERITY treated patients indicated that GI symptoms interfered quite a bit or extremely with regular activities as compared to almost 29% of TECFIDERA patients. We believe that the differentiated tolerability profile of VUMERITY will lead to improved adherence to therapy.

In addition to our established treatments, we aim to leverage our MS pipeline to address the remaining unmet need in MS. This includes our oral remyelination program, BIIB061, our oral BTK inhibitor, BIIB091, as well as our next-generation anti-VLA4 antibody that seeks to build on the success of TYSABRI in the high efficacy space.

Turning to neuromuscular disorders. We are presenting an update on the ongoing DEVOTE study, testing a higher dose of SPINRAZA at the AAN meeting this week. Data from the patients enrolled in the Part A open label safety evaluation cohort followed for up to approximately five months were consistent with the well-characterized safety profile of the currently approved 12 mg dose of SPINRAZA. The emerging safety profile of the higher dose supports its continued development, as we evaluate the potential for greater efficacy.

We also added an additional cohort to the Phase 1 study of BIIB078 or C9ORF ASO for ALS. Safety data has been supportive of escalating the dose, enabling us to conduct a more complete evaluation of the therapeutic index. The Phase 1 study containing the additional cohort is now expected to readout in the first half of next year.

In neuropsychiatry, last month, Sage Therapeutics released an interim analysis of the ongoing open label Phase 3 SHORELINE naturalistic study of zuranolone in major depressive disorder. The data showed that in the completed 30mg zuranolone cohort, approximately 70% of participants with the positive response to an initial two-week treatment required utmost one additional zuranolone treatment during the one-year study.

SHORELINE also showed that following the two-week treatment, more than 70% of patients in the 30 mg cohort and 80% of patients in the 50 mg cohort achieved a positive response as evaluated by the 17-item Hamilton Rating Scale for Depression.

In both the 30mg and 50mg cohorts, zuranolone demonstrated an adverse event profile consistent with previously reported data. Adverse events including somnolence, dizziness, and sedation were observed to be more frequent in the 50mg cohort, but were similar in severity to events seen with the 30mg treatment of zuranolone. We believe these data further supports the potential therapeutic effect of zuranolone, and we look forward to the readout of the WATERFALL study of zuranolone in major depressive disorder anticipated later this quarter.

Next, I would like to turn to movement disorders. In collaboration with Sage, we recently announced a SAGE-324, also known as BIIB124, met the primary endpoint of a statistically significant reduction from baseline compared to placebo in the upper limb tremor score on pre-specified components of the essential tremor rating assessment scale or TETRAS at day 29. This corresponded to a 36% reduction from baseline in upper limb tremor amplitude in patients receiving BIIB124 compared to a 21% reduction with placebo.

BIIB124 also demonstrated a safety profile consistent with previously reported data. This trial was designed to test the high end of the dose range established in Phase 1 study, 60mg in an effort to determine whether or not proof of concept could be established in essential tremor. BIIB124 clearly shows efficacy in essential tremor, but at this dose, the incidence of somnolence was 68% with 62% of patients going to a lower dose and 38% of patients discontinuing treatment. We are working closely with Sage to plan next steps for the development of BIIB124.

The unmet need in tremor — essential tremor is significant. There have been no new drugs approved for essential tremor in more than five decades. The drugs currently used to treat essential tremor have tolerability issues of their own, which limits their use in clinical practice. We believe more can be done to help patients with this most common movement disorder that interferes with activities of daily living and hampered social engagement.

In Parkinson’s disease, the Phase 1 and Phase 1b studies of BIIB122, a small molecule LRRK2 inhibitor are now complete and the safety and biomarker goals were achieved, which we believe support continued development of BIIB122. As previously announced with our collaboration partner, Denali, we expect to initiate late-stage clinical development in Parkinson’s disease patients by the end of this year.

Our R&D organization delivered a number of important milestones in the first quarter of the year. We believe there is much to be excited about with seven additional readouts expected by the end of the year, including pivotal readouts in major depressive disorder, postpartum depression, ALS, and choroideremia.

I will now pass the call over to Mike.

Michael McDonnell — Chief Financial Officer

Thank you, Al. Biogen had another solid quarter despite the challenges from TECFIDERA US generics and COVID-19, as we continue to execute well across our core businesses. We remain in a very strong financial position with significant cash and financial capacity to continue to grow the business over the long term. I will now review our financial performance for the quarter and share with you an update to our full-year guidance for 2021.

Total revenue for the first quarter of $2.7 billion declined 24% versus the prior year at actual currency and 25% in constant currency. This decline was mostly driven by the continued impact of TECFIDERA generics in the United States. Total MS revenue for the first quarter, including our previous royalties of $1.7 billion decreased 26% versus the prior year at both actual and at constant currency. This decline was also driven by the continued impact of TECFIDERA generics in the US. Excluding US TECFIDERA, total MS revenue including our previous royalties were relatively flat, demonstrating the resilience of our MS business in a competitive market.

Global TECFIDERA revenue for the first quarter of $479 million declined 56% versus the prior year. Outside of the US, first quarter TECFIDERA revenue of $317 million declined 2% versus the prior year. Normalizing for accelerated shipments due to COVID-19 of approximately $28 million in Q1 of 2020, revenue outside the US increased 7% with continued patient growth.

During the quarter, we saw continued improvement in VUMERITY trends. VUMERITY revenue was $74 million in the first quarter and is now the number one MS oral product in terms of new prescription share in the US.

TYSABRI first quarter global revenue of $503 million declined 4% versus the prior year. As a reminder, in Q1 of 2020, TYSABRI revenue benefited by approximately $40 million due to a combination of extra shipping days in the US and the pricing adjustment in Italy. Normalizing for these dynamics, revenue grew 4% year-over-year as we saw a 5% increase in global TYSABRI patients. We continue to believe TYSABRI is well positioned to play an increasingly important role in the treatment of MS, as we progress several important initiatives including subcutaneous administration and extended interval dosing.

Moving now to SMA. Global first quarter SPINRAZA revenue of $521 million decreased 8% versus the prior year at actual currency and 12% at constant currency, although we were pleased to see 5% growth in global SPINRAZA patients versus the prior year. In the US, SPINRAZA revenue decreased 37% versus the prior year as we continue to see impact from competition exacerbated by the impacts of COVID-19. Outside the US, SPINRAZA revenue grew 13% versus the prior year, including approximately $40 million due to timing of shipments in Q1 of 2021.

Moving now to our biosimilars business. First quarter revenue of $205 million decreased 6% versus the prior year at actual currency and 13% at constant currency. Normalizing for accelerated shipments due to COVID-19 of approximately $15 million in Q1 of 2020, revenue was flat year-over-year. Our biosimilars business continues to be negatively impacted by pricing pressure, as well as a slowdown in new treatments and reduced clinic capacity due to COVID-19. Despite the continued impact of COVID-19, we continue to be the leading anti-TNF biosimilar provider in Europe and Benepali continues to be the number one prescribed etanercept product across Europe. We believe we have the opportunity to continue to grow in Europe as well as within the US and other geographies by commercializing new products.

Total anti-CD20 revenue in the first quarter of $389 million decreased 25% versus the prior year. RITUXAN revenue decreased approximately 50% versus the prior year, partially offset by a 29% increase in the previous royalties. We expect continued erosion of RITUXAN due to biosimilars.

Turning now to gross margin. First quarter gross margin was 82% of revenue, down versus 83% in the prior quarter and down versus 87% in Q1 of 2020. The continued reduction in gross margin was primarily due to the declines in TECFIDERA and RITUXAN, both of which are high-margin products. We expect to continue to experience downward pressure on gross margins.

Moving to expenses and the balance sheet. First quarter non-GAAP R&D expense was $514 million. First quarter non-GAAP SG&A was $595 million, including approximately $75 million related to the launch preparations for aducanumab, net of reimbursement from Eisai. In the first quarter of this year, our effective non-GAAP tax rate was approximately 16% versus approximately 17% in the first quarter of 2020.

During the first quarter, we repurchased 2.2 million shares of the company’s common stock for $600 million. As of March 31, 2021, there was $4 billion remaining under the share repurchase program authorized in October of 2020, and we expect to utilize a portion of this throughout the remainder of the year. Our weighted average diluted share count was approximately 152 million shares for the quarter.

Non-GAAP diluted earnings per share in the first quarter was $5.34. In the first quarter, we generated approximately $769 million in cash flow from operations. Capital expenditures were $93 million and free cash flow was approximately $676 million. We ended the quarter with $7.3 billion in debt and $3.4 billion in cash and marketable securities, resulting in $3.9 billion in net debt. In addition, our $1 billion revolving credit facility was undrawn as of the end of the quarter.

Let me now turn to our updated full-year guidance for 2021. Our full-year 2021 revenue guidance remains at $10.45 billion to $10.75 billion despite unfavorable currency dynamics, which I will explain in a moment. We are increasing our non-GAAP diluted EPS guidance from our previous range of $17 to $18.50 to a range of between $17.50 to $19.

Our capital expenditure guidance is unchanged at $375 million to $425 million. This financial guidance assumes that foreign exchange rates as of March 31, 2021 will remain in effect for the remainder of the year, net of hedging activities. It is important to note that we are reaffirming our revenue guidance despite an expected currency headwind of approximately $80 million net of hedging activities to our full-year 2021 revenue guidance due primarily to the strengthening of the US dollar from January 1, 2021 through March 31, 2021.

Our guidance continues to assume that aducanumab will be approved in the US by June 7, 2021, although uncertainty remains on the FDA’s decision. If aducanumab is approved in the US, we would expect an immediate launch. However, dose titration will result in less revenue per patient in the initial months of treatment, and as a result, we would expect only modest revenue for aducanumab in 2021 ramping thereafter.

We continue to expect rapid erosion of our US TECFIDERA business as well as significant erosion of RITUXAN in the US. We expect that the decreased revenue from these high margin products will put pressure on our gross margin percentage. Note that our gross margin in Q1 2021 was 82% of revenue, which reflects this dynamic.

We now expect full-year non-GAAP R&D expenses will be between $2.3 billion and $2.4 billion and non-GAAP SG&A expenses will be between $2.6 billion and $2.7 billion. This guidance reflects our expectation that both R&D and SG&A will increase beginning in the second quarter due to new collaborations, program readouts, and aducanumab investments as we prepare for the potential launch.

Our full-year SG&A estimate continues to include an approximate $600 million investment in support of the potential launch of aducanumab. Of this amount, approximately $200 million would be reimbursable by Eisai and would be reflected as collaboration profit sharing post commercialization and not part of SG&A. We expect we will utilize a portion of the remaining share repurchase authorization of $4 billion throughout the year, although this will depend on a variety of factors including our business development activities. We have not included any impact from potential tax or healthcare reform or any impact from potential acquisitions or large business development transactions in our guidance.

And with that, I’ll now turn the call back over to Michel for his closing comments.

Michel Vounatsos — Chief Executive Officer

Thank you, Mike. Biogen continue to demonstrate resilience and strong execution in the first quarter of the year, and we believe we remain on track to make 2021 a transformative year for the company. This of course starts with the potential approval of aducanumab in the US. The unmet need and cost to society for Alzheimer’s disease are tremendous and mounting. Alzheimer’s creates a cost burden of over $600 billion per year in the US and the cost for caring for an Alzheimer’s patient can be over $0.5 million.

Alzheimer’s deprives many patients of their independence. By the age of 80, approximately 75% of people with Alzheimer’s disease leaving the nursing home after per-patient cost of approximately $100,000 per year. The potential approval of aducanumab will be an unprecedented milestone for patients, their families, and society at large.

Beyond aducanumab, we continue to advance our neuroscience pipeline as we work to create a multi-franchise portfolio. We look forward to the seven expected mid-to-late stage readouts this year, across a range of therapeutic areas such as Alzheimer’s disease, ALS, ophthalmology, depression, and stroke, including four in Phase 3.

I want to reiterate our commitment to maximizing returns to our shareholders and bringing innovative therapies to patients over the long term. These demands that we continue to allocate capital efficiently and effectively while maintaining operational discipline and managing costs. As we have demonstrated in the past, we will always strive to have an optimal capital secure as well as aim for superior returns from the investments we make.

Lastly, I would like to reflect upon Biogen’s longstanding commitment to corporate responsibility. Our dedication to patients and the broader society is not only limited to developing novel therapeutics for patients suffering from serious diseases, but extends much further. At Biogen, we work with purpose to advance science to address the urgent and long-term challenge-facing humanity.

Now, more than ever, we continue to strengthen environmental, social, and governance priorities across the company. To underscore this commitment, we have decided to incorporate an ESG metric into our corporate scorecard to help ensure that we accelerate actions across these critical issues.

In closing, I would like to thank our employees around the world who have demonstrated their dedication to making a positive impact on patients’ lives and all of the physician caregivers and participants in our clinical development programs. We are living through challenging times with COVID-19 and our achievements could not be realized without a passion and commitment.

We will now open the call for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Your first question comes from Michael Yee of Jefferies. Please go ahead.

Michael Yee — Jefferies — Analyst

Hey guys, good morning, and thanks for the question. It sounds like you remain quite optimistic about a potential approval for adu. I was just wondering if you could make some comments about the work you’ve done with both sites and payers. I know that if this does get approved, there is a lot of uncertainty around PET reimbursement and logistics and MRI monitoring and things of that nature. So could you just maybe comment about the work you’ve done there and how [indecipherable] that that will be fairly smooth? Thank you.

Michel Vounatsos — Chief Executive Officer

Thanks for the question, Michael. I mean, the focus of the team since many months in the US was first to identify and assist the sites of care in terms of infrastructure advise and processes, because we anticipate that there will be, if approved, a very large influx of patients. We know that the availability of specialist and diagnosis capabilities are a bottleneck, so we had to prepare the sites of care and we have worked all around the country in order to identify those today. We anticipate approximately 600 ready-to-treat, but many more on the works.

So, this was — this work was managed by a cross-functional team, and obviously, we started with the medical engagement and scientific leadership, and we are pleased with where we are in terms of those sites and their ability to welcome the patients, to diagnose the patients, to dose the patients, to monitor the patients, including the fine processes such as formula relisting, who is in charge of what. So, the team has done a very thorough work, and I am pleased with the progress each time I review the operation in the US and the launch readiness, we are bridging, we are passing some new milestones. I am also pleased with the digital capability that is an overlay of reach contact and one is building towards different stakeholders, not only the physicians but also the patients and patient services.

As you know, so far, neither PET nor CSF amyloid are reimbursed in the US. CSF is reimbursed now in Europe, not in the US, but we believe there is a path forward. Concerning price, I think that we are there, Mike. We have done a thorough engagement with different stakeholders, considering the burden of the disease and the clinical meaningfulness that aducanumab will bring. And we have engaged with pharmacoeconomics including ICER many times and orders in the US and beyond. So I think that the team is ready, and I’m pleased with the progress. And actually, the three months addition were like a gift for the team, because we are never fully ready for such a launch. And I must also appreciate the collaboration from Eisai in this launch readiness.

Michael Yee — Jefferies — Analyst

Yeah. Perfect. Look forward to it. Thank you.

Operator

We’ll take our next question from Ronny Gal of Bernstein. Please go ahead.

Ronny Gal — Bernstein — Analyst

Hi. Good morning, everybody, and thanks for taking the call. Just wanted TECFIDERA to the extent you are successful in prosecuting the appeal or getting any of the patent. Can you discuss how that will impact the market that is — I know you got a few settlements and I’m wondering if those products were going to stay on the market or they have to exit the market if you basically have agreements if you are able to win the appeal?

Michael McDonnell — Chief Financial Officer

Yeah. So, Ronny, it’s Mike. Thank you for the question. And as we said, we do expect to hear something on the appeal in the first half of this year, and as we sit here in April 22, that could really come at any time now. There are many generics on the market as you know and our legal team has worked extremely hard to try to win this appeal and overturn this decision. To the extent that we are successful, obviously, that would be very good news on winning the appeal. But there would be a course forward from there.

And so, in order to come up with a quantification of potential financial benefits, it would be premature and it would be hard to calculate immediately, it would be the type of situation where we would get the good news and we would have to navigate from there and a number of additional steps that we would have to go through to get to finalization and how the generics that are in the market now would react. It’s a little bit hard to predict before that would actually happen.

So, I would say that obviously, it would be a very good day and good news, and we’re working very hard and we believe in our case, but we would have to sort of evaluate the ruling what it says and we would communicate more in terms of potential benefits as soon as we know what that course look like.

Ronny Gal — Bernstein — Analyst

So, let me sharpen it just a little bit. Do you have any settlement that will allow any of that down the market longer term, even if you win?

Michael McDonnell — Chief Financial Officer

Yeah, that’s not something that we can kind of comment on the specificity, Ronny.

Ronny Gal — Bernstein — Analyst

All right. Thank you very much.

Michael McDonnell — Chief Financial Officer

Yeah, we are — and I apologize for that. But this is one where again we have a great legal team that is working very hard in overturning this appeal and we’ll very hopefully hear something very soon and we’ll communicate more on exactly what it all means. We have to look at the ruling and the specifics and we have to see the reaction of the generics that are in the market before we really could answer that.

Ronny Gal — Bernstein — Analyst

Thanks, I appreciate it.

Michael McDonnell — Chief Financial Officer

Thanks for the question.

Operator

Our next question comes from Marc Goodman of SVB Leerink. Please go ahead.

Marc Goodman — SVB Leerink — Analyst

Yes, good morning. Can you give us more color on SPINRAZA outside the United States when you talk about some of the regions and just the underlying trends in what’s going on there? And then just with TECFIDERA China, can you just help us, are you booking sales? Is that something that you view as a big opportunity? Thanks.

Michel Vounatsos — Chief Executive Officer

So thanks for the question. We are very pleased with the performance of SPINRAZA ex-US. And I’m also pleased with the performance in the US, even we did face some discontinuation due to the compounded effect of COVID and also the perceived enhancing modality with the overall of everyday convenience. And so, there are a lot of learning that is coming from the US to apply to Europe and ex-Europe.

We can see a very strong resilience in core European markets, and we can see a very fast momentum of growth in the emerging geographies. So all in all, I am very pleased. I think that moving forward with the pandemia improving with the rate of vaccination, the fear to visit institution will gradually decrease and the SUNFISH II data continues to reinforce the synthesis that basically the product is not that efficacious for the toddlers above the age of five. The dose limitation because of all the reasons that we all know basically has set the limit in terms of efficacy, while the weight of the young adult or toddler, young adult increase which is the largest part of the market and where we have faced some switches.

So obviously, the learning from the US will benefit probably ex-US in an environment where we should have less of the pandemia. I am pleased with the emerging economies where rare diseases were not the priority for so long, and nowadays, are on the agenda in terms of resource allocation. So, very good momentum.

Concerning TECFIDERA in China, it’s a second product approved in China for Biogen, and I am delighted about that. As you know, I was posted there for my previous company, doing four years with my family, and I fundamentally believe into the long-term potential of this market, that is already the number two in the world. So, the demand is tremendous and epidemiology is rapidly emerging with similarities with the one of the West. So, incidence is lower for MS, but there are still more than 100,000 patients. The rate of diagnosis and the rate of treatment with DMTs is extremely low, it’s less than 5% of the market.

So, disabilities are high and it gives a great opportunity to establish TECFIDERA together with the rest of the portfolio with a bit more time hopefully. China is an important market for Biogen. We are managing Asia-Pac with our Japan from China. We have partnered with a Chinese company on a biosimilar. So it’s an invest geography, obviously. We don’t lose the focus on the rest, but a good momentum in China. We have a great team, more than 200 people, and it’s only the beginning. Thank you for the questions.

Operator

We’ll take our next question from Yatin Suneja of Guggenheim Partners. Please go ahead.

Yatin Suneja — Guggenheim Partners — Analyst

Hey, guys. Thank you for taking my question. I have a question on zuranolone. Can you maybe talk about the expectation from the upcoming WATERFALL study, the importance of durability, and how should we think about durability beyond the two-week dosing period? Do you need to hitch that sig beyond day 15 and how the piloting might be structured after the primary endpoint? Thank you.

Alfred W. Sandrock — Head of Research and Development

Hi, this is Al. Yes. So the primary endpoint is the efficacy at day 15, and a key secondary endpoint is the durability, if you will, at day 42. And there is two ways to look at that. One is, does it stay separated from placebo? Or perhaps more importantly, what happens between day 15 and day 42 on the efficacy on HAM-D score in the treated patients? And so, I think that if you look at prior precedents, the latter is probably more important than the former. But I think both will need to be looked at.

And then, of course, the key durability comes from the data from SHORELINE, which shows that patients who responded to the initial course of treatment need utmost one additional treatment. About 70% needed utmost one additional treatment for an entire year. So, I think that both kinds of durability are important.

Operator

We’ll take our next question from Umer Raffat of Evercore. Please go ahead.

Umer Raffat — Evercore — Analyst

Hi, thanks so much for taking my question. Michel, Michael, I would just like to understand the stock repurchase trends better, and I’m specifically looking at over $10 billion worth of repurchases that were done between 4Q ’19 through 3Q ’20 versus around $1 billion that’s been done in 4Q ’20 and 1Q ’21. I’m just trying to understand the drop in magnitude better, and I realize we can’t necessarily correlate that to one specific thing. But I would just love to understand the thought process there.

Michael McDonnell — Chief Financial Officer

Umer, it’s Mike. Thanks for the questions. So a couple of comments I would say that we did buy back $600 million in the quarter and we continue to be very committed to our share repurchase program and we continue to see our stock as a very accretive investment and we will continue to buy back stock and utilize a portion of the remaining $4 billion authorization throughout the rest of the year as we said.

If you look back five years, Biogen has repurchased something on the order of 71 million shares for a total value of $20 billion. And I would say that we’ve certainly availed ourselves of a great opportunity there and I think that you do have to differentiate levels of cash flow prior to the entry of generics for TECFIDERA. Obviously, that was a highly profitable product with a large revenue base in the US that’s now eroding pretty rapidly. So, we don’t have the level of free cash flow that we had prior to that. But with that said, we still do have a meaningful amount of cash with $3.4 billion on hand at the end of the quarter and we remain very committed to share repurchases. There is a differential obviously in the level of free cash flow and we had a lot of excess cash on hand during various periods of time, even more than we have now prior to the generic situation.

So within the confines of what we can do, we remain very committed. $600 million is still a pretty meaningful number, and we will continue to evaluate a very robust pipeline of BD opportunities. We will continue to invest in those. You probably saw that we announced investment in biosimilar opportunity with Bio-Thera that we’re excited about and we will continue to repurchase shares and we have the wherewithal to do that. So I wouldn’t read too much into the volume as being a sign that we’re not committed to it, because we’re something that we continue to see as a very accretive investment.

Operator

We’ll take our next question from Matthew Harrison of Morgan Stanley. Please go ahead.

Matthew Harrison — Morgan Stanley — Analyst

Great. Good morning. Al, I was wondering if you could just comment on tau and just given what we’ve seen from some of the other studies, what your level of confidence is in this Phase 2 readout that’s coming up. Thanks.

Alfred W. Sandrock — Head of Research and Development

Yeah. Hi, Matthew. Look, you’re talking about gosuranemab, BIIB092, which is our antibody that targets essentially extracellular tau, trying to prevent the spread of tau from cell to cell. And you’re right. I mean, the Roche negative results do make us think that it’s tough to target tau with an antibody, but we remain hopeful, we haven’t seen the data from our own Phase 2 results yet. It’s a large study, 650 plus patients testing several doses, and we’re testing it in the early stages of Alzheimer’s. So I think it’s a robust study that will enable a very good go-no-go decision to Phase 3.

I did mention BIIB080 in my prepared comments, because it’s a different approach to tau. It’s using an antisense to decrease the production of tau, and it should affect both intracellular and extracellular forms of tau, very different approach. And we’re excited about the results that we found in Phase 1 in terms of dose and time-dependent reduction in tau expression as seen in the CSF and we’re looking forward to sharing those results later this year at a scientific meeting.

Operator

We will take our next question from Brian Abrahams of RBC Capital Markets. Please go ahead.

Brian Abrahams — RBC Capital Markets — Analyst

Hey, guys. Thanks so much for taking my question. On aducanumab, can you maybe remind us again of the Phase 3 monitoring requirements for safety in those studies and maybe your latest views on what you think would be most appropriate in a real world setting? I guess what preparation centers would need to have for both management and monitoring as well as optimizing a benefit risk on the patients who start adu? Thanks.

Alfred W. Sandrock — Head of Research and Development

Yeah. Hi, Brian. The main adverse event associated with adu is ARIA-E and that’s readily monitored by very — a standard sequence used for MRI scans. And in the Phase 3 trial, most of the — almost all the monitoring was done within the first year of treatment, because the risk of ARIA goes down with time as you — the longer you treat, the less likely you are to get ARIA-E, and I believe we had six or nine scans in the trial. But we don’t think that you will need that many. We were being extra cautious in our Phase 3 trials. Exactly, how many we will need will obviously depend on our discussions if we get to them — or when we get to them in terms of the label, which we don’t have yet.

I would remind you that most of the ARIA-E were asymptomatic. I’d say about two-thirds were asymptomatic. And when symptomatic, they were — the symptoms were generally mild such as a headache and confusion. So, I think it’s a readily dealt with — readily managed adverse event, and I think the sites, because almost all — I mean, virtually, every center, even private practice clinics have access — ready access to MRI. And as I said, it’s a standard sequence. So I don’t think it’s going to be a major problem to monitor for ARIA.

Operator

We’ll take our next question from Colin Bristow of UBS. Please go ahead.

Colin Bristow — UBS — Analyst

Hey, good morning, and congrats on the quarter. On the EMBARK trial, I believe you reduced the planned enrollment from 2400 to 1800. I was just wondering could you give us some color on the drivers of this, whether this is slow enrollment than your expectation. But most importantly, I wondered if you could give us, do you have any data around the enrollment rates from the active aducanumab arms versus placebo arms for the feeder trials. Thanks.

Alfred W. Sandrock — Head of Research and Development

Yeah, thanks for the question. EMBARK is enrolling. The rate of enrollment is actually as predicted. It’s enrolling on track. But as you noted, the total number of patients to be enrolled was reduced and the main reason for that was that there were eligibility requirements — medical eligibility requirements that were not met by many of the patients who were seeking to enroll in EMBARK. I’d say though that the interest level on the part of patients as well as investigators remains high. And as I said, the enrollment does remain on track, and I don’t have the data on whether or not there is differential enrollment from the different feeder arms.

Operator

We’ll take our next question from Evan Seigerman of Credit Suisse. Please go ahead.

Evan Seigerman — Credit Suisse — Analyst

Hi, Al. Thank you for taking my question. I just wanted to touch on the recent data readout of SAGE-324. While you have the stat sig result on the primary, we did see a very high discontinuation rate in the treatment arm. Two things. Can you remind us how you plan to mitigate this in a pivotal trial? And what is the acceptable rate of somnolence for a successful commercial asset in ET? Thank you.

Alfred W. Sandrock — Head of Research and Development

Well, you’re correct that, as I stated in my comments, the primary endpoint was met, which I think, and I want to congratulate my colleagues at Sage for that. That’s a major result. The obvious thing to do now since we tested the high end of the dose ranges to see whether we can reduce the dose mitigate some of the adverse events while maintaining efficacy, there may be other maneuvers such as changing the dosing algorithm, if you will, perhaps easing up to a dose titrating. And other approaches would include potentially looking at key subgroups.

In terms of what’s acceptable, I think that’s a very tough thing to answer definitively. I think that every patient looks at the benefit they’re receiving from a drug and the tolerability issues they have to accept with the drug. It’s probably a day-to-day decision that patients make. And in this situation, they can see themselves what’s going on with the tremor. And perhaps, there will be several doses one day that will allow patients to choose between doses that optimize for them the benefit versus the risk.

Michel Vounatsos — Chief Executive Officer

Evan, I think that at this stage of development, the mindset of the team is to try to do better than what we have seen with this initial Phase 2, 60% or so symptomatology and approximately 30% discontinuation, so it’s a fascinating question that you’re asking sort of at the benefit risk, but the mindset is to try to do better.

Operator

We’ll take our next question from Jay Olson of Oppenheimer. Please go ahead.

Jay Olson — Oppenheimer — Analyst

Hi, thanks for taking my question. My question is about your subcu strategy. Do you consider subcu TYSABRI as a complement to IV TYSABRI or a substitute that will eventually replace IV TYSABRI? And since there was a study of subcu aducanumab, can you remind us about your plans for a subcu form of aducanumab and how you will apply your experience from subcu TYSABRI in to aducanumab?

Alfred W. Sandrock — Head of Research and Development

So, thanks for the question. We are very excited by the momentum we see behind TYSABRI, high efficacy, and a mechanism that is eventually slightly favored in the current environment versus beta cell depletors. The stigma around TYSABRI was always the risk of PML, and with the data we generate and the extended interval dose and hopefully the data with NOVA study mid-year readout, we should really shed light on the optimal dose and mostly frequents of the treatment.

Subcu is an opportunity to enlarge the target. When we look at the prescriber’s landscape for TYSABRI, which is a tremendous success, it’s extremely limited. And is it because of the infusion centers? Is it because of the risk of PML? Probably both. Here, we are combining the opportunity of accessing high efficacy with a subcutaneous dosing. So, we should be in a position to enlarge the use and the targeting for TYSABRI.

Operator

We’ll take our next question from Geoff Meacham of Bank of America. Please go ahead.

Geoff Meacham — Bank of America — Analyst

Hey guys, good morning, and thanks for the question. On adu, I was just curious if you guys have provided any more materials to regulator. I wasn’t sure if further details from the EMBARK study were getting factor. And just real quick on tau, Al, I wanted to just get your view of the tau imaging what Lilly did just to be able to assess Alzheimer’s disease severity. Is that something that you think down the road could be implemented in your studies? Thank you.

Alfred W. Sandrock — Head of Research and Development

Hi, Geoff. Yeah, we remain on track for the PDUFA date of June 7. And obviously, if we had submitted major additional data, that would affect that. So — but other than that, we don’t want to comment on what we’re submitting our interactions with FDA except to say that we continue to have regular meetings with them. And to us, everything is on track for a PDUFA decision by the PDUFA date.

In terms of tau, the concept of using tau imaging essentially to stage patients is a very interesting and novel concept. And they showed that there are certain — if you look at amyloid PET as well as tau PET, you could potentially choose patients with the right stage of Alzheimer’s disease that would maximally benefit from an amyloid lowering agent such as donanemab and potentially aducanumab and BIIB2401. So I think it’s a very interesting concept. I think it’s something that we need to look at again with further study. But it’s something that could potentially be useful.

Operator

We will now take our last question from Sumant Kulkarni of Canaccord. Please go ahead.

Sumant Kulkarni — Canaccord — Analyst

Good morning, thanks for taking my question. Given you’re so deep in the FDA’s review of aducanumab, other than perhaps stage of Alzheimer’s disease of patients, what are your latest thoughts or expectations on any specific limitations in labeling of adu? Perhaps by ApoE4 carrier status, are there more genetic-oriented variables?

Alfred W. Sandrock — Head of Research and Development

Yeah, I wish I could. I just can’t answer those types of questions. We’re still in the middle of our review process. And I’m sensitive to the fact that we are under review. So, one day soon, I hope to be able to discuss all that with you.

Michel Vounatsos — Chief Executive Officer

I want to thank you all for joining the Biogen call today. We remain focused on flawless execution and our operation in order to deliver on our guidance. We are also focused on the velocity of our pipe. And in the short run, we are very excited with important readouts and obviously with the critically important regulatory decision for aducanumab. Have a good day.

Operator

[Operator Closing Remarks]