Biogen Idec's CEO Hosts 2012 Analyst Day (Transcript)

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Biogen IDEC Inc (NASDAQ:BIIB) June 12, 2012 10:00 AM ET


Wendy Gabel

George A. Scangos - Chief Executive Officer and Director

Tony Kingsley - Executive Vice President of Global Commercial Operations

Douglas Edward Williams - Executive Vice President of Research and Development

Alfred Sandrock - Head of Neurology Research & Development

Glenn Pierce - Former Chief Medical Officer and Senior Vice President

Wendy Gabel

Good morning. I'll ask everyone to have a seat so we can get started. Thank you, everyone, for coming, and welcome to Biogen Idec's Analyst Day for 2012. This program is being webcast today, and we've also posted our slides up on our website.

I'm going to start with the Safe Harbor statement. Comments made in this program include forward-looking statements that are subject to risks and uncertainties. Words such as believe, expect, may, plan, will and similar expressions are intended to identify such statements. Actual results could differ material from our expectations, and you should carefully review the risks and uncertainties that are described in the slides and in the Risk Factors section of our most recent annual and quarterly reports filed with the SEC. We do not undertake any obligation to publicly update any forward-looking statements.

So with that, I'll turn the program over to George Scangos, our Chief Executive Officer.

George A. Scangos

All right. Okay. Well, good morning, and welcome. I'm only going to talk for a couple of minutes because today's not a day for you to hear from me. I think it's a day that you'll hear from people and about projects that we don't normally get time to talk about. Let me briefly introduce some of the people we have here: Doug Williams who's EVP of R&D; Tony Kingsley, EVP of Commercial Operations; Paul Clancy, most of you know -- where's Paul? Chief Financial Officer; Al Sandrock, Chief Medical Officer; Glenn Pierce, our head of Medical Affairs; Theresa Podrebarac, who I -- there you are, okay; and, of course, the IR team, Wendy, Ben and everybody else.

Look, I think the company, I feel good about where the company's standing right now. We obviously had a good 2011. You all know BG-12 data is filed, U.S., EU, several other geographies now. This year, we're anticipating 3 additional readouts, long-acting Factor VIII, long-acting Factor IX, and of course, dexpramipexole for ALS. So our future and our success, I think, is in our own hands. That's a nice place to be. The first part of our strategy is don't screw up, I mean, execute, get all that stuff done, and I think we're firing on all cylinders right now, and we're in good shape to get all of that done.

We operate here with some, I think, very simple principles, we're putting patients first, playing to win, which means no dabbling. It means that if we're going to do something, we should do it with power, we should do it with critical mass, we should do it with excellence and not wasting resources, right? We are taking a very hard look at all of the projects we're doing, constantly evaluating whether it's -- they're worthy of spending the next tranche of dollars on them. And as we go forward, and as you'll hear today, our early-stage pipeline is much improved, some very interesting compounds in there now. We'll continue to work on that early-stage pipeline as we go forward.

Commercially, I think we've stabilized AVONEX sales in the U.S., those seem to be doing quite well, then Paris off to a good start in Europe, and so things are looking good there. So from strategically, and thinking about what projects we go after, and I think you'll hear more details about this as we go on. We want to work within the areas of interest, neurodegeneration, immunology and inflammation, hematology. And we want to work on projects where there is some insight into the biology, so we have some purchase and we can be rational about the drugs we try and develop, where there is a need and where the risk is reasonable, the risk meaning we have a reasonable way to address the biology, that there are biomarkers to inform us how we're going forward in the clinical development, that there are regulatory endpoints which the regulators are likely to agree to, and we're increasing our efforts in many aspects of doing that right now. So I think all of this has the potential and already has led to increase in the quality of the pipeline, and we'll continue to work on that and make an increasingly better, more effective, more efficient as we go forward.

So with that, I'm going to step down, welcome you all, and turn it over to Tony Kingsley, Head of Commercial Operations, who will tell you -- spend a few minutes talking about the commercial -- some commercial aspects, and then we'll turn it over to the R&D guys. Tony?

Tony Kingsley

Okay, thank you, George. Good morning. I am pleased to have the opportunity to present to you our plans for our commercial success. I'll spend most of this time talking about the MS portfolio, where I know you have some questions. Can we sell AVONEX, TYSABRI and BG-12? Can we position all 3 so that they take share from others and not from each other? Do we get some kind of superior economic or competitive benefits as a franchise player? The answers to those questions are all yes. What I'd would like to do today is paint a picture of the market today and as it evolves, and talk about where those opportunities are. We will share perhaps a bit more data and some more detail in terms of our market perspective and some data about the market than we have in the past, you will welcome that. I am certain that I will leave you wanting. On some specifics, obviously, it does not make sense to share very detailed competitive strategy and positioning in a forum like this, but we'll make an effort to paint this clear picture as possible for you, why we think there is opportunity across the portfolio.

So let me start with some basic facts about the market. We think that the number of patients on therapy in the world is in the 700,000 to 800,000 range today. The vast majority of that is in the U.S. and Europe. On a patient basis, the market grows, lower left, about 5% a year. Typically, lower than that in the U.S. where diagnosis rates are higher, typically higher than that outside the U.S. Then there are some pools of patients that we think of. We think there are about 20,000 to 30,000 new starts per year, so patients starting on therapy. We think there are perhaps 1.5x to 2x as many switches, patients who are on therapy switching to another therapy.

If you look at why patients switch, sometimes it's for tolerability reasons. The patients may have injection site reactions or things like that. More often, it is actually for efficacy reasons. The reality is, these drugs help control the disease, but they don't stop it. And patients will break through over time, so the bigger portion of switches does come from tolerability -- sorry, from efficacy switches.

So if we just go back one, please, thank you. So therapy switches, 40,000 to 50,000, there are patients who leave the market every year, quitters. Again, there are a couple of reasons for that. Sometimes, it's tolerability. They just can't put up with taking the therapy, whether it's injections or other things over time. Also because the MS is a relapsing disease. Patients may think that they are doing fine and can do fine for an extended period of time without taking therapy. And every year, there's a collection of patients who leave therapy, who essentially leave the market. Some stay out for a long time, but there is also a flow of patients who come back in, which is the last number on the right on this chart. That number tends to go up when new products come to market, and that was certainly, when there are new alternatives, that was certainly the experience that Gilenya seems to have had. In the first 12 months, they reported, and I think we would agree based on our research that about half their patients came from the returning quitter pool as opposed to new starts or switches. So that's basics on the flows.

Let me talk a little bit about what the opportunities are. We've said to you in the past, there are a number of physician and patient segments who have different attitudes and beliefs about MS and MS treatments. I want to try to shed a little bit of light on that.

So let's talk about patients. One simple way to think about patients is on the horizontal axis, what is their need for efficacy, which is a function of what's the course of the disease for them? And on the vertical axis, how open are they attitudinally to change and risk associated with going to another therapy. So if you look in the upper right, we think there is a meaningful segment of patients who have active disease, who need more efficacy and who attitudinally are open to change and open to some risk. This is not the only, but a key target population, obviously, for TYSABRI where we capture patients and also are increasingly seeing patients switch to TYSABRI earlier.

If you move southwest on this chart, I'd say the next segment is similar issues, but maybe different attitudes. These are patients who may be well-controlled on a therapy for a period of time, but will break through. Again, will have efficacy breakthroughs or maybe significant tolerability issues that will cause them to consider other products. But attitudinally, they are more conservative, and they are less risk taking. So it takes a lot of effort in educating both patients and physicians to move this group to switch, but the opportunity is there.

The next group as we work down to the southwest here is particularly good for incumbents and particularly challenging for new entrants. Patients who are well-controlled have maybe moderate -- mild or moderate disease and are well controlled on an existing therapy for a period of time and are risk averse, in the absence of significantly increased disease activity will not switch. All right. Safety matters a lot to this group, I would say. And then the lower left is perhaps the most complex at least psychologically of this group. This is, again, a meaningful portion of patients, particularly younger patients, who want to put the disease in the background. They don't want to be reminded every day that they have it. They are, for example, much less likely to be on a daily therapy. And for this group, again, they have milder disease. Convenience and tolerability tend to matter a lot. So that's one look at a simplified view of what some different patient segments we play against are.

So with that, let me talk about neurologists, if you thought that was complicated, and give you what is a simple and, I will say, simplified, for purpose of this discussion, view of how to think about different physician profiles.

So at the top is the MS specialists. They're located in centers. They see lots -- they specialize in MS, they see lots of patients, they get lots of referrals and because of that, they tend to see lots of more difficult patients. They -- these treaters use all the products. They may use AVONEX in great measure for patients or other platform therapies. They have been typically the biggest users of TYSABRI. We think they will be the early adopters of BG-12. Having said that, they were also the early adopters of Gilenya. They participate in clinical trials, and they will be the early adopters of other products as they come to market.

The next tier down, I would call sophisticated independents. These are people who see a lot of MS. They may see a more diverse neurology practice as well. They tend to be well educated on the clinical data, and with that, comes strong attitudes. So you will find in this second segment strong AVONEX loyalists just as you will find strong high-frequency interferon advocates, and you will find large Copaxone users. They tend to draw strong opinions. They are influenced both by the top tier KOLs and also promotional education. And while they may be somewhat later adopters of new therapies, they do move to new products over time, so a meaningful portion of TYSABRI's business and opportunity actually would sit in this segment as well.

And on the bottom of the chart, there's a large swath of what I would call busy community docs. There are probably some meaningful subsegments within here, but I think the thing that they have in common is the busy part. These docs see very large patient panels. They're very pressed for time. They put a high value on easy compliance for the patient, and also, frankly, low burden to the practice because they are pressed for time. Copaxone does very well in this segment. AVONEX, by contrast, has historically been more challenged here. If you think about patients who have flu-like symptoms or have injection fears and concerns, that takes time of the physicians and the office staff, and so we've had to work against that. That changes with PEN, and I'll come back to that. This group tend to be later adopters. Safety and ease are the things that are important to this set of physicians.

So let's put that together, patient segment simplified view, position segments simplified view, but it gives you a sense of the complexity of the market and talk about what happens. So at the top, injectables, 85% -- and what we view will happen in the world. Injectables are about 85% of the market today. That will shrink. There's no question it will shrink. It may shrink slower than seems intuitive because you can see there are some sticky pieces in there, but in that product segment, convenience will increasingly win over time, cue AVONEX, cue peg, cue AVONEX PEN.

The second is the highest efficacy group, which is about 10% of the market, is really just TYSABRI today. That segment will grow for 2 reasons. There are lots of sub-optimally treated patients as I've talked to you about; second, there will be new entrants into this market. Efficacy wins in this market, in this piece of the market, efficacy wins. But efficacy particularly wins when it's paired with good risk management, so that the patients can manage the -- physicians can manage the patients well, again, advantage TYSABRI, we think.

And then finally, orals; really Gilenya, today, about 5% of the market, no question it's going to grow. But I think to unlock that potential and draw from that injectables group in large number at the top, a couple of things are needed. One is a better safety profile than what's available for people today; and the second is, more convenience and lower burden, not just for the patients, but for the physician practices. Again, think about those busy community practices. We think BG-12, obviously, has the potential to do that.

So I'm going to touch quickly on the AVONEX, TYSABRI and BG-12 in order, and then come back and try to conclude across this. So the case on AVONEX within the injectables class, class is going to shrink. We think Biogen Idec is well-positioned to gain share in that class over time because our life cycle management investments on AVONEX have emphasized convenience, and we think convenience becomes the more important differentiator in this market over time.

The experience that we've had with the PEN, which has been very positive, I think, speaks to that. So what does the PEN do for us? First of all, in the markets where we've launched it and have had good success and seen share gains. It gives us something new to talk about in a competitive class where share of voice matters and sell the other parts of the AVONEX story. It gives us an improved ability to meet those needs of patients but also the needs of the busy practices who don't have time, and it gets -- leads to better compliance which is important to clinical outcome. So that's what the benefit of the AVONEX PEN has been. We think, over time -- and the titration kit that supports that, we think over time, PEG, PEGylated interferon is potentially a very, very interesting value proposition in this market as I have defined it.

As you know we have, and Al will probably speak to this later, we have readouts on the PEGylated program in 2013, testing it twice a month and once a month. If you assume that injectables class still exists in some measure which we do and you think about that kind of value proposition in the market where convenience matters, it's actually quite interesting. And in our testing with healthcare providers and focus groups and other things, I think we get some pretty positive feedback on that. So it's a very interesting play for -- potentially for us in the longer term in that segment of the market.

Let me talk about TYSABRI. So starting on the lower left here, the TYSABRI story starts with efficacy. It always starts with efficacy because that is the most important attribute. I'll come back to that. But with the investments that we have made in the product risk-stratification, improving benefit risk profile perception, that is leading the earlier use of the product in the treatment paradigm. We see good evidence of that. And I want to comment on the sort of end of that arrow.

We recognize that other entrants will come into the market. You guys see the pipelines, as do we, and there will be other products that will come into the market that will have meaningful efficacy claims. We think that TYSABRI will have a couple of year head start, frankly, on them in terms of risk-stratification and all the support services that we put around helping people manage TYSABRI patients and that, that's an advantage that should serve us well over time.

So we sometimes skip this, so I'm not going to do it today. I just -- I say the TYSABRI story starts with efficacy. I want to remind you on the, pretty much all the measures that matter, TYSABRI leads to better outcomes for patients. That continues to be the core message in what will be the differentiator for TYSABRI. Risk-stratification is additive on top of that. And there are 3 things that we're seeing in the data about the assay today that I want to share of you. The first is, there's high awareness, all right? We surveyed neurologists in multiple markets and see whether they know about the assay, and the metrics suggest there's very high awareness of the assay. The second is, we're continuing to see nice growth in testing volumes, both in the U.S. and outside the U.S. And the third is, an increasing portion of those patients who are tested with the assay are actually candidates for TYSABRI. They're not existing patients, and that's what's required to unlock the growth potential, so the leading indicators on that front are very solid.

There is also, I think, evidence that risk-stratification is taking hold. On this take, this is a selection from market research in 4 European countries where we asked physicians in what cases they are likely to use TYSABRI. And you can see 80% say in JCV negative patients, about 40% JCV positive with no prior immunosuppression, only 11% JCV antibody positive with prior immunosuppression. So what it suggests is they're getting risk stratification. We also see the overall confidence in the benefit risk of the product moving in the right direction, but we also see it stratifying which is exactly what we want to accomplish. So I think that's a positive indicator for TYSABRI.

Okay. So what does risk stratification do with our physician segments? The top-tier MS specialists are already, by and large, comfortable with TYSABRI. That's where our biggest customers are. We think there's a significant depth opportunity there because they have big panels of patients, difficult to treat patients. And as they move more with risk stratification, move more patients earlier, there's depth in top-tier MS guys. In the independent, sophisticated independents, there's actually 2 opportunities. There are meaningful numbers of TYSABRI users in that segment, but they tend, as a rule, to use it on a relatively limited number of patients. So again, there's a depth play; these are people who have gotten comfortable with TYSABRI, risk stratification gets them comfortable using more, and of course, there is an opportunity to convert more physicians to TYSABRI in that group as well.

The busy community is not a sweet spot for TYSABRI. But as the overall risk-benefit percentage of the product changes, you'll see more of these docs who are willing to consider TYSABRI and put patients on TYSABRI or refer them other places, so that's an additional opportunity. So the path forward with TYSABRI is, continue to focus on the efficacy measures. So I'll come back to that, I'll come back to that, expand the physician base, expand risk stratification, use that as a way to penetrate particularly the JCV negative population, get people to treat patients earlier. And on this last point, as I said, we continue to enhance our TOUCH program, our patient support services, all the things that make TYSABRI relatively easier for physicians to administer and patients to do as we will have other therapies to come into the market, we think it's important to get to emphasize that.

Okay, BG-12. Everybody's waiting for BG-12. Okay, 3 messages: We're ready for launch, I'll talk about that; second, there's a big unmet need here; and third, we think that BG-12 has a profile that will position it to be broadly used by a broad set of physicians and patients, including physicians and patients who might not naturally go to AVONEX or to TYSABRI.

So ready for launch, we have done detailed product positioning, market research. The promotional campaigns are well underway. We are scaling up resources including customer-facing resources now in the U.S. and as appropriate, in markets outside the U.S., all with an eye to an early 2013 launch in the U.S. and then subsequently in Europe. We've also put significant investment against health economics, market access, all the things that we'll need to do to achieve reimbursement and the strategies associated with that. So from a commercial standpoint, we feel very comfortable with where we are to get BG-12 off to a terrific start when we get market authorization. Not on the chart, but supply chain and all the things that support that are all well under development as well.

Okay. So there's an unmet need for oral therapies. I think the left side of this chart is pretty self-explanatory, so I won't spend a lot of time on that. I think that the BG-12 efficacy data which people have been exposed to will speak for itself. Again, what we think matters in the market, the unlock potential for orals is a safety profile that makes people more comfortable relative to the alternatives that exist today and convenience. And that's a low treatment burden both for the patients, but also is something that is easy for a broad base of physicians to use without a lot of -- it's easy to get patients started on it, it's easy to get patients to say on it. And we think that's where BG-12 is positioned well to play broadly in the market.

So what happens to our BG-12 and our segments? The reality is, we think it will play well across all these segments. The top tier will adopt to BG-12. That is there, but we feel comfortable that they will be early adopters of BG-12. Sophisticated independents, who are data-driven, will find the data appealing, and we think will adopt.

Interesting opportunity here, which will contrast a little what I've said to you in other parts is in the busy community practices, BG-12 has a strong value proposition. In that, it should be relatively easy for them to put patients on, get patients on and that's where we see a particular opportunity for BG-12 that's different and probably more expansive in some ways than it is for the other products.

So last thing I'm going to do is show you a different cut at the market that I think also speaks to where we think some of the opportunity is. This is a pretty simple, and I took the numbers off to keep it more conceptual, but this is based on real data. It's a pretty simple look at on the vertical axis, this is in the U.S. market, how many physicians write MS products? And then on the horizontal axis, what's the average number of prescriptions per physician? So there's a bit of breadth on the vertical axis and depth on the right.

If you look at the platform therapies today, they're all pretty broadly written by many thousands of physicians, and they all have pretty high depth for physicians. Copaxone, which is the largest product on the market, not surprisingly has both the highest breadth and the highest depth. AVONEX, a little bit more concentrated, and then the high-frequency interferon's even more concentrated than that.

If you look at TYSABRI, not surprisingly, TYSABRI tends to be concentrated among fewer physicians. It is a more complex therapy to manage. It has historically been a more complex administration, but they tend to use it more deeply, and that's okay, right? Gilenya, I think, is an open question at this point. This shows Gilenya in Q4 of '10 when it started out and where we think it is in the recent period. It certainly has not gotten easier for physicians to use with the recent news. And so I think that a broad depth play for Gilenya could be challenging, but we'll see where that goes.

Let's go back one, sorry. So where do we go from here? The platform therapies on the top are going to -- with new entrants are going to compress to the left, right? And they will compete among themselves. And we think that, as we've said, that AVONEX is well-positioned in that environment. TYSABRI with risk stratification can move east, right? We still think there is depth opportunity with existing physicians because there's a big pool of patients who need more efficacy and we need more efficacy early that we can capture, and we think it can also move north because more physicians will become comfortable.

BG-12 enters this map with what we think is a profile that will make it broadly appealing to a very broad set of physicians. We also think, well, obviously, different segments will adopt at different rates in the patient group, it's ultimately potentially appropriate to a very broad set of patients. So we see a big opportunity for where BG-12 can play as a broad product on this map. And again, it's differentiated in a lot of places from where our existing products lay today. What we see is a lot of competitive share that can be taken across the franchise.

So let me wrap up on MS franchise leadership. Again, tried to paint a picture of there are some different segments of physicians and patients -- a couple of messages. There will be some overlap among our products, but each of our products has strengths that play to different physician and patient segments and different intersections of those, which we think is important. And second, there's a lot of competitive share to be taken out there. That costs money. To move this market and move these physician and patient segments in different measure requires promotional investment, which is one of the reasons we have argued, we don't want to be penny-wise and pound foolish, and we're putting meaningful promotional resource against the 3 products that we think that make sense. But finally, we do get meaningful synergies as a franchise in the infrastructure that we have that allows us to get better economics across the whole franchise over time.

So MS franchise, let me start at sort of 3:00, we think we have a sales force that has privilege access. We have strong market access and payer capability. We are involved, as a company, in global trials, engaged with customers, integrated with R&D. We obviously have the scientific understanding and the deep research which you're going to hear about from others today, and we wrap that up with strong specialty distribution channels and strong patient support services. We think that positions us as a franchise player to do extremely well going forward, and we're excited about that.

So with that, let me shift gears. I'm going to talk quickly about hemophilia, about the factors. Glenn's going to talk to you in a more compelling way about some of this in a minute. So I want to narrow it on a couple of topics, which is we think there's a market opportunity here. We think there's a market opportunity for the Fc products in extended half-life, and we think we are doing the things that we need to get prepared as a company to be successful when we bring them to market.

So -- and just some basic facts, we think the market's about $6 billion worldwide, about $1 billion in Factor IX, about $5 billion in Factor VIII. And we think there's a real need for long-acting products. I'm going to flash you a couple of -- I could have picked lots of different pieces of market research just to illustrate this. Physicians, this is healthcare providers, what do you think are the biggest unmet needs? In the hemophilia market today, long-acting factor clearly comes to the top of the list. Patients, what are the unmet needs or frustrations you have? It's does not last long enough, inconvenient to infuse frequently. This doesn't do justice, I think, because says 70-some percent of patients have an issue with this. The real thing, and I think Glenn will speak to this is, patients who think about the proposition who are on prophylaxis of infusing themselves 30x, 60x, 80x, 90x fewer a year, that's a very powerful value proposition that we think is going to attract a lot of interest.

So where is the opportunity? Factor VIII on the left, Factor IX on the right, prophylaxis accounts for something like 30%, little more in Factor VIII, a little less in Factor IX of the patients. But it accounts for about 75% of the units. The opportunity for us, obviously, with this value proposition is to attract switches from prophylaxis patients who want to get the benefit of long-acting factors. And then the second opportunity is, as the benefit of long-acting factors becomes more clear and as the science advances, we should see the prophylaxis side of the market grow. So those are really where our 2 core opportunities are, and we feel pretty confident that we will have a value proposition to get after that.

So much like BG-12, we have lots of activities underway, developing our strategy, building up our commercial infrastructure, a lot of emphasis here on building relationships in the community with foundations, with patient advocacy groups and with other stakeholders. This is a market where that's exceptionally important, and I think we've made very good progress on that front. And we're scaling up the commercial team. We have a pretty good idea of what the commercial footprint looks like that we need to have in place, and we feel like we can put that in place efficiently and effectively, and we've already made a lot of progress on putting in place the key elements of that.

And then finally, if we talk about what a successful commercialization will require, first of all, people have to know you're coming. The awareness of Biogen Idec as a player in the hemophilia space has increased measurably in the last couple of years. This is 92% of U.S. HCPs aware of Biogen Idec hemophilia, 93% of advocacy groups, about half of patients at this point. Obviously, we're not in any kind of a promotional mode. Trust is important. We are building relationships that will allow people to understand that we have a commitment to this market and that we will be a trusted partner. World-class manufacturing is one of the big reasons we're in this business, but we are scaling up our supply chain and manufacturing so that we will be ready for launch and ready with a variety of presentations that we'll need.

And the last, which is important, is attracting talent. We have been very successful in attracting, on the scientific side and on the commercial side, talent from parts of the industry including other players, including people who work in channel intermediaries, including people who work in major advocacy groups. And we feel very comfortable that this set of products is attracting to Biogen Idec the best talent in the industry. And with that, we feel that will be a key to success.

So with that, I think I will stop. I think we're going to have time for some questions in a little bit. I'm going to introduce Doug Williams, our EVP of R&D, who's going to come up and just shift us out of commercial into the real R&D day. So thank you very much.

Douglas Edward Williams

Well, good morning, everyone, and welcome. Glad you could all join us, those of you who are here in person and also those of you who are out on the webcast. It's a real pleasure for me to welcome all of you here to Cambridge, which is our site for research and development for the company, so it's fitting that you're here today.

And what we'd hoped to do over the course of the next few hours is really give you, I think, a broader view of the R&D portfolio and to, as George said, take an opportunity to dive down a little bit deeper into the pipeline than what we normally have an opportunity to do when we meet with you one-on-one. So today is really an exercise in, I hope, convincing you that we really are taking some concrete steps to strengthen the pipeline, to build a sustainable pipeline, one that's got significant innovation in it and one that is truly patient-focused because that's the way we think about creating drug candidates here is really with an eye towards the patient first and foremost.

So let me move on and talk a little bit about what's happened in the, I guess, 18 months or so since I joined the company back in January of 2011. There's been a lot of changes that have taken place. George really got the ball rolling when he first joined the company and made some, I think, broad strategic decisions that were absolutely the right thing to do. Kind of comes back to the premise he put forward that you can't dabble. If you're not competitive, if you're not world-class, you shouldn't be involved in these areas. And I think the conclusion that George reached, and it's certainly one that as an outsider looking in, I agreed with was the cardiology and oncology programs really didn't have what it took from a competitive perspective. And as far as developing highly differentiated candidates that we're going to be able to compete in the marketplace of the future.

So that decision was made. George also started the process of looking at the pipeline, a process that I continued and actually, along with the rest of the R&D management, we took some steps in March of last year to really prune back the portfolio. We terminated a total of 17 programs. These were programs that were from late pre-clinical all the way phase -- all the way through Phase II. And candidly, I think we were pretty ruthless about the way in which we went through the portfolio and asked some pretty tough questions about whether or not these were assets that were still worthy of us spending shareholder money on and whether or not we felt like we could create competitive molecules in that space.

So 17 programs were terminated at that time. I'm pleased to say, we've also recruited some very important key talent into the organization. There's a slide coming up that shows their pictures. There's some information in the back of the book that you received here, that gives the bio for some of the new folks that have joined us. But I'll go through that in a little more detail in a few minutes. But that's been a key facet of building the R&D organization as well, is really adding to our capabilities and strengthening some of the holes we had in those capability sets.

We've refocused the neurology, immunology and hemophilia programs, really narrowed down the areas that we work in. Again, this notion of not dabbling and making sure that we have the skill sets internally to be able to prosecute these targets and move them forward as expeditiously as possible. So we've gone through an exercise both of pruning and strategic planning, and I'll talk about where we're focused in neurology, immunology, less so in hemophilia, but nonetheless, we've taken some significant steps there.

And of course, we've supplemented the pipeline with some in-licensing over the course of the last several months to fill in some of the gaps and really to bring in some high-quality assets from the outside.

2012 is really a year where we're, in addition to, as George said, focusing on execution, execution, execution on the late-stage pipeline. We will deliver on those. But we also have to start thinking about the very front end of the process here. How are we going to discover and validate new targets so that we actually bring forward innovative new medicines based on work that's being done in our laboratories? It's our view internally amongst the R&D management that, that's a critical step for us to rebuild the discovery and validation capabilities in this company for a couple of reasons. One, it allows you to develop candidates that not everybody else is chasing after. It allows you to be first in class. It gives you the opportunity to really open a door on a new pathway and be able to exploit that pathway for the development of new candidates. But it also allows us to recruit a somewhat different phenotype of individual into the research staff which frankly helps with the research culture in a general sense. So these are activities that are a focus for us this year, and I'll speak a little bit about how we're doing that in terms of both internal reallocation of resources, but also jump-starting the process through some very selective academic collaborations.

So this is the rogues gallery of the new R&D group. And I'm only highlighting some of the changes that we've made over the course of the last 12 to 18 months. In the case of both Glenn and Al, they've taken on new responsibilities. As I said, there's information about all of these individuals in your book, but I'll just give a short vignette on each of them. Going in the clockwise direction; Glenn, of course, has just recently taken over as the Head of Global Medical Affairs in addition to continuing to shepherd the development of the hemophilia programs forward towards, hopefully, BLA filing in the not-too-distant future for both Factor VIII and Factor IX. Glenn is going to give you some, I think, some new insights into the design and execution of the Phase III programs for both Factor VIII and Factor IX when he gets up and gives his talk in a few minutes. So Glenn, great physician scientist, has really been key to our being able to attract the level of talent in the hemophilia group that we have.

Jo Viney. Jo is the Head of our Immunology Research Group. Jo and I worked together at Immunex in the past and really a great opportunity to be able to recruit her here. She's got fabulous track record in terms of building immunology teams and bringing innovative immunology candidates forward into the Amgen pipeline.

Theresa Podrebarac, again, someone that I had the good fortune of working with in a past life. She was at Merck Serono when I was at ZymoGenetics, and we were collaborating on the atacicept program. Theresa is a really talented rheumatologist and someone who has responsibility for our immunology and fibrosis development programs now. So very fortunate to have Theresa. She'll be giving you some insights into the early-stage immunology pipeline in a moment.

A real coup for us is recruiting Spyros Artavanis-Tsakonas. That's a mouthful, I know. Spyros will be just fine. But Spyros is a Professor of Cell Biology at Harvard. He is truly one of the most gifted scientists I've ever worked with. He joined us on a sabbatical for a year. He's our Chief Scientific Officer right now and really is an important part of revitalizing the discovery engine in the company, in part because he's got the kind of access to academic labs that really allows us to open doors and to create the kind of consortia that I'm going to talk about with some of our early-stage research programs. So Spyros has joined us just recently, and we're thrilled to have him on board. Teresa Compton joined us from Novartis. She's a card-carrying virologist and is responsible for all of our P&L stratification efforts now.

Tim Harris joined us from the National Cancer Institute in Frederick. Tim is actually a biotech veteran. Many of you may know him from some of his past lives in the biotech industry. But Tim is really an expert at the use of molecular stratification tools. Obviously, he was doing that at the NCI. He's joined us and taken charge of all of our biomarker and personalized medicine strategies here at Biogen Idec, and we're very fortunate to have him join us.

And then of course, Al. Al was recently promoted to Chief Medical Officer. You all know Al. He is, again, a very gifted physician scientist, really the architect of a lot of the success in our neurology pipeline, and somebody that I'm very pleased to be able to say that I work with. So this is the team. It is a very talented team and one that's very passionate about delivering new medicines.

So in 18 months, what have we gotten done? We, meaning me, particularly. And I think back in March when we finished with the portfolio pruning process, this is what the pipeline looked like. And suffice to say, it was heavily weighted towards Phase III assets, which is a really good thing. No complaints there. But, obviously a very unbalanced pipeline in the sense that we actually had more Phase III candidates than we did the sum total of Phase Is and Phase IIs. So obviously, the pruning process was not done with an eye towards creating a shapely pipeline. As I said, it was done pretty ruthlessly to eliminate some of the weaker programs that were in the portfolio.

So this is where we stood in March of last year. And since that time, we've made a number of changes. We've made a lot of progress in terms of changing the portfolio. All of these orange bars represent either additions to the pipeline or they represent programs that have formally transitioned from one stage of development to another. So as you can see, we now have a collection of Phase II assets, all of these are teed up and ready to go into Phase IIa or IIb proof-of-concept-type studies. So those will all be initiated between now and the end of the year. We've added 3 assets from the outside, and we'll speak about all of those in presentations that Theresa and Al are going to give. We've obviously made progress on BG-12 filing in the U.S. and in the EU. Dexpramipexole, obviously, went from not even starting formal patient enrollment at the beginning of March last year to essentially completing enrollment in record time. And we're waiting on data at the end of the year. And then we initiated the SPMS study for TYSABRI. Al's going to tell you about the rationale behind that. So a lot of progress, a lot of additions to the portfolio and progress in terms of pipeline molecules formally transitioning to the next stage of development. So this is good news in terms of the pipeline. Certainly not done, it's a never-ending process of triaging the pipeline. But I think we have made some progress.

If I zoom out now on the Phase I and Phase II assets here and just sort of highlight those, most of these you're going to hear about. There are 2 that we just chose not to talk about today for time reasons. We won't have an opportunity to talk about the BIIB037 molecule, which is an anti-beta amyloid antibody that we have in Phase I right now. And we won't speak about the anti-CD40 ligand program today. That's in collaboration with UCB for general lupus. Both strong programs, but for the sake of time, we're going to focus on the other molecules.

I will point out that LINGO, TWEAK, and arguably the STX-100 are homegrown opportunities for us. STX-100, I know we acquired Stromedix, but actually all of that pre-work, pre-clinically was done here. We spun the company out and then sort of spun it back in again with the acquisition. So that's a molecule that began its life here at Biogen Idec and, obviously, will be moved forward into the clinic.

So a mix of both internal and externally sourced candidates. It's our goal in R&D to start to see an increasing percentage of homegrown targets moving forward as time goes on as we begin to focus more emphasis on target discovery and validation.

This is sort of a high-level view of really how we're thinking about R&D. And I know this looks like motherhood and apple pie. To a certain extent, it is. We're trying to build the most solid science-driven R&D pipeline in the industry. Obviously, a key to that is recruiting and retaining the best people. As I showed you early on, I think we've made some progress in terms of being able to start balancing out the pipeline. There's still a lot of work to be done in that regard in terms of increasing the size and scope of the Phase I and Phase II assets so that we have that next wave of Phase III candidates as the current crop begin to roll off over the next few years.

Imaging is a key part of the strategy; obviously, in neurology, that's an important aspect of clinical trial activities. But we actually see that there are a number of innovations made in hardware, software and then actually in imaging reagents, some of which is being done here, that allow us to use noninvasive techniques to serially sample experimental animals and to serially sample patients to help us make better decisions as we transition from Phase I to Phase II and ultimately make the big-dollar decisions to move into Phase III studies. So biomarkers and imaging are a key part of the strategy. Every program transitioning from research to development is required to actually have a biomarker plan in place, so we're quite serious about that.

Academic partnerships. Again, a key part of the strategy that tap into the expertise that exists not just locally here in Boston, which clearly with MIT and Harvard, we have some really great academic groups to tap into here, but on a much more global basis. We are doing a number of partnerships, and I'll highlight just a couple of them in a few slides. And then, of course, you have to keep maintaining your technology base, which is largely invisible, but no less important.

So Ken Rhodes is the head of our Neurology Discovery group. Ken has been running this group now for several years. As George pointed out, one of the key areas of focus for us is neurodegenerative diseases. And I think it's safe to say that the science now is emerging in the area of neurodegeneration, and there are a few common themes that are beginning to develop in terms of how these disorders start, how they progress and what perpetuates these. And what this allows us to do is to really start to define some of the key nodes in those pathways that lead to these disorders and to be able to attack those directly through a variety of different needs -- through a variety of different means. Obviously, we're looking for areas where there's unmet medical need, an obvious fit with our core competencies, be that in the research labs or in the development team.

Development feasibility. We're obviously looking for situations where we can come up with a regulatory strategy and an approval process that we think we can talk through with the regulators. In some cases, we will be actually charting a new course. I think the SMA program is probably a good example of where there may be some opportunities to utilize some of the discussions that had gone into the PDUFA Reauthorization Bill about accelerated approval approaches. And in diseases like SMA where there is no therapy, there's the opportunity to really use surrogates in a way that can get you to an approval very quickly and with very small sample size. So these are the sorts of programs that we're thinking about and trying to push forward.

Protection and repair are some of the key areas of focus for us. Proteinopathies, again a common theme in a number of different neurodegenerative diseases, whether it's beta amyloid or synuclein. This is a theme that is beginning to develop in a number of these diseases. There's also genetically well-defined diseases. Again, I go back to SMA as sort of the poster child for that particular approach where we know exactly what's wrong in SMA. And we can define therapies that fix exactly the problem. So these are unique opportunities that pop up, and we want to be opportunistic and take advantage of those.

And again, translational neurology, meaning imaging is a key part of this. This is a slide I stole from Al which I like. It sort of bins the different therapies we have in terms of some common pathways. Obviously, one of the things that's unique about the nervous system is the fact that you've got cells that are essentially long-lived to the point of the lifetime of all of us. Some of which have processes that are a meter or more in length. These cells have very high metabolic requirements. They are very susceptible to oxidative stress, and there's a propensity as we age for macromolecular integrity to break down, meaning proteinopathies develop because we tend to misfold these proteins later on in life. So a number of our therapies are really geared towards these common pathways. And there's a lot of overlap between them. For instance, a demyelinated axon is much more to susceptible to oxidative stress than a myelinated axon. So there's an interplay between all of these different pathways, and we see these as common nodes that allow us to potentially cross over into multiple diseases.

Imaging, we're using this very aggressively now. We think it will allow us to make better decisions. It allows us to look directly at things like target engagement. Did we hit the target? It also allows us to look at pharmacodynamic effects; try saying that one 3 times quickly. And this is just an illustration of some of the small animal work that we're doing in the labs now. On the left is an illustration of target engagement. So, obviously, that is a rodent's skull that you see. The bottom panel shows a transgenic animal for beta amyloid prior to the development of plaques. So it's a young transgenic animal. There's no real plaque deposition of beta amyloid that's taking place. You don't see a signal when you infuse the animal with a radiolabeled version of our BIIB037 anti beta amyloid antibody. But if you take an animal that's been aged that has significant plaque deposition in the brain, you can see a very strong signal. It tells us couple of things. Number one, it tells us that our antibody is able to cross the blood brain barrier and get to the target. And two, it gives us some sense quantitatively of how much of the antibody actually gets in and binds to the target. So these are the sorts of tools that allow you to look at target engagement.

On the right-hand side is an example of the lysolecithin model which is a way of direct demyelination in the brain. You inject that, and you can cause what you see up at the top, those bright white areas are the areas of demyelination that take place. If you treat with the Anti-LINGO antibody in the middle panels, you can see a diminution of the damage that's caused by remyelination. And you can go back into these animals histologically after the fact and confirm that what you're looking at is actually remyelination. So the confirmation experiments can be done as well. So it allows us to track animals now with the pharmacodynamic endpoint we're looking at over a serial period of time.

Within the immunology space, we're really focused now on that interplay between chronic autoimmune and inflammatory disorder, tissue injury and fibrosis. You can see that with the TWEAK molecule. You can see that with the STX-100 molecule. It's that interplay that we're focused on as far as the targets we're choosing right now. And what's interesting is that a number of the targets are specifically up regulated only in the tissue where damage is being done on a chronic basis. That's true of both STX-100 and TWEAK, so we've got a preference for those sorts of targets that give us that built-in specificity as far as being able to antagonize that pathway. And of course, we're interested in chronic autoimmunity and inflammation with small molecules where there's still an opportunity, we think, to develop candidates to address some unmet medical needs.

Imaging is not just for neurology. We're actually applying imaging approaches to our immunology programs as well. In this case, looking at lupus nephritis and trying to develop methodologies in collaboration with academic groups to look at fibrotic changes in the kidney as we are treating with something like the Anti-TWEAK antibody. So these are noninvasive ways of looking at, on the right-hand side, you're essentially looking at hypoxia in the tissue. This is a diffusion-weighted MRI, healthy kidney versus a kidney with chronic glomerulonephritis.

And then on the right, there's another technique called T1p which allows you to look at essentially macromolecule deposition in a tissue. And it's a sensitive technique in the sense that before histologists can pick this up, this imaging technology allows you to see it prior to enough deposition for it to be picked up by histology, that's why there's the separation between the fibrotic rats even at the first time point and the sham-treated rats here. So these technologies and these techniques are actually amenable to other areas outside of neurology, and we're actually in the process of conducting a Phase 0 study to begin to look at whether or not these techniques of imaging can help us make better decisions as we transition the lupus nephritis programs forward.

Key for 2012 and beyond is actually reinitiating the whole process of discovery and validation of targets. It's actually an area that we got away from in recent years. We sort of purposely moved our resources out of this area and I think there's a strong bias here amongst the R&D management that we need to reemphasize that. It's important for the future of our pipeline in terms of allowing us to have proprietary targets, and therefore, first-in-class molecules. But as I mentioned earlier, it also allows us to create a different kind of discovery culture here which I think is important for the long-term scientific health of the organization. So that will involve recruiting some people of a different phenotype, I'll call it, than what we've had in the past, and we're well underway with that process right now. We are reallocating some of the resources we have at the moment to serve those needs and academic partnerships are really important to jumpstart this process in the near term.

Just to give you an idea of some of the projects that we've kicked off in collaboration with academic groups, this is what we call the Interactome program. And this is really basic target discovery here. Perhaps the most fundamental way to approach this, it builds on what's already been done in drosophila, which is there's a full-blown map of protein-protein interactions of the entire drosophila proteome. Spyros actually did this work and led those efforts.

So the technology's there; it's available, it's ready to roll and we've kicked this process off with a group at Harvard now. It's an ambitious project over 3 to 4 years to essentially map the entire protein-protein interaction spectrum in human cells. It'll be a first-pass effort obviously, but it's a great starting point and it's going to produce a wealth of information. It's going to allow us to understand which proteins interact with which proteins. We've seeded the collaboration with 200 proteins we care about upfront, which is not to say that the other 9,800 we're going to work on are not of interest to us but this is the starting point in this collaboration, is some cherry-picked targets that we're putting in.

And the secondary screens are really going to allow us to define the novel drug targets. We'll be able to do cell-type specific screens, in neurons, in immunologic cell types. We'll be able to do drug perturbation screens which will allow us to look at how those protein-protein interactions change, and what that tells us about important nodes that we can go after from the standpoint of drug development. And then of course, as we identify mutant proteins in various pathways, we can ask questions like, how does that change the interaction profile and what's that tell us about potential pathways and targets that we can interrogate from a drug development perspective.

So that's a very ambitious and exciting program. This is another program that's underway now that Tim Harris has been a major architect of these activities. We're in ALS, obviously dex is the first, but we're in the process of working with a consortium to really define at a much deeper level some of the genetic causes of sporadic ALS. We'll be complementing that with a focus, I’ll characterize it is as almost like a program project to define some of the cell biology aspects of ALS that are not well-understood.

And this information will allow us to define both new genes that could be targets for drug development, but also will help us stratify patients over the long haul. So this is sort of a 2-for, if you will, in terms of the intent here both to define new and innovative targets, but also to allow us to stratify patients against existing drugs. So that was a quick overview of the strategy around discovery.

Let's zoom back out again to this concept of making sure we execute on the late-stage pipeline. Obviously haven't lost sight of that. We have a number of very significant data events that are going to occur over the course of the next few years. This just highlights what those are. Obviously there's a significant clustering of events in the last half of this year with Factor VIII, Factor IX and dexpramipexole, all expected to read out. And then early next year, we would expect PEGylated interferon to read out. And then a string of molecules reading out on an annual basis thereafter.

So a lot happening in the pipeline, both in terms of changes that will facilitate creating a robust pipeline that is sustainable and composed, we hope, of more and more home-grown candidates. But also a number of late stage data events that are significant for us in terms of driving near-term value for the company. So I'll stop by leaving with this slide. Just to make the point once more that we've made some progress. We still have a ways to go in terms of building the kind of pipeline that we all want to see in terms of sustainability. But I think each and every one of the candidates that we focused on has a high degree of differentiation, will address an unmet medical need, and really reflects the therapeutic areas of focus that we are involved in right now.

So with that, I'm going to turn it over to Al who's going to talk about the late-stage neurology pipeline. And then Glenn's going to come up and address the issues around Factor VIII and Factor IX. So, Al?

Alfred Sandrock

Thanks, Doug. It's my pleasure to tell you about the neurology pipeline. This is the entire neurology pipeline, all products that are currently in the clinic. But I'm only going to talk about these products that I highlighted here. In the first portion in this presentation, I'll talk about 3 of our late-stage products: TYSABRI, BG-12 and dexpramipexole. And later in the afternoon after lunch, I'll talk about the early-stage pipeline.

So let's begin with TYSABRI. And the major thing we're doing in terms of development with TYSABRI is testing it in secondary- progressive MS. And why are we doing that? Well, first of all, there's a high unmet need. All drugs that have been approved for relapsing forms of MS, many of them have been tested, all the interferons certainly have, Copaxone has, Gilenya has been tested and is being tested in primary progressive. But all these drugs have failed in secondary-progressive MS. So even though they work in the relapsing-remitting stage, they don't seem to work so well at least on disability progression in secondary-progressive MS. And so why is that? And it seems the biology changes from -- as you go from early MS to relapsing, remitting MS to early progressive MS to late progressive MS.

And a group in Italy led by Francesca Aloisi have pointed to the presence of these gray matter meningeal foci, also called lymphoid follicles or ectopic germinal centers. These start to appear probably in the late stages of relapsing-remitting MS, but they become more prevalent in secondary-progressive MS. And it appears that people who have these foci have a worse disease course. And what's interesting about these meningeal foci is that just adjacent to them, you start to see cortical lesions as shown here in these gray. So there's an association between cortical lesions and these ectopic germinal centers.

And many studies are now showing that most of the disability that you see in MS can be accounted for by cortical pathology, which is a new way of thinking about MS. We used to always think about MS as a white matter disease and we're now appreciating that it's actually not just a white matter disease. That if anything, there's more pathology in the cortex and that, that cortical pathology is more related to disability progression. And so we'd like to obviously not get these cortical lesions and we think that one way of doing so would be to disrupt these ectopic germinal centers.

Now why do think TYSABRI can do this? Well, one indicator of the presence of these lymphoid follicles in the sub-meningeal space is the presence of a chemokine in the CSF called CXCL13, which is a B-cell chemokine. And the elaboration of this chemokine has been -- is associated with the formation of these lymphoid follicles.

And a Danish study, and I refer to that here, led by Sellebjerg with the senior author Per Sorensen published in Neurology a couple of years ago showed that there was a very big decrease if you look pretreatment versus post treatment with Natalizumab on the CSF concentration of CXCL13. So that's just one indicator that it could be that treatment with TYSABRI will decrease the formation of these ectopic germinal centers, and therefore, decrease the cortical pathology.

So given that, we have launched a secondary progressive study with TYSABRI. The primary objective is to investigate whether treatment with TYSABRI slows the accumulation of disability not related to relapses in subjects with secondary-progressive MS. This is a 2-year study where we randomized roughly 850 patients to placebo versus the standard dose of Natalizumab. It's a Phase III multicenter study and the primary endpoint uses a novel composite measure of disability progression and we're only enrolling patients with secondary-progressive MS within the EDSS range of 3 to 6.5 which is typical of the enrollment criteria for SPMS and we're excluding patients with relapsing-remitting MS and primary progressive MS.

So now moving onto BG-12 for relapsing-remitting MS. I think many of you already know this. We know that BG-12 probably works, at least in part, by activating a naturally occurring pathway that's present in all cells to deal with oxidative stress, and this is the Nrf2 pathway. So under normal unstressed conditions, Nrf2 which is a transcription factor is produced by the cell and is degraded rapidly because it's associated with Keap1. So cells are constantly making Nrf2 and destroying it under unstressed conditions. And the reason for this is that the cell wants to be able to respond very rapidly to oxidative stress. And in fact, many people view this Nrf2-Keap1 complex as a redox center for cells.

So when oxidative stress -- so that's what I'm showing here, that association with Keap1 leads to degradation of Nrf2 through the Proteosome. Now treatment with BG-12 results in these molecules, dimethyl fumarate or MM, monomethyl fumarate, interact with Keap1 and disassociate it from Nrf2, which keeps Nrf2 around, it can now enter the nucleus and activate genes that have the antioxidant response element in the promoter region of the gene. And so many genes have this response element, and these genes tend to be those that deal with detoxification, normalization of energy metabolism, repair and degradation of damaged proteins. So these are the kinds of enzymes and proteins that you want to have under conditions of oxidative stress to deal with that.

And so as I said, we have evidence that BG-12, at least in part, probably works by activating the Nrf2 pathway. It may also have other activities and we're just beginning to learn what some of those other activities are but we think this is one of the major activities. We also know that BG-12 reaches serum concentrations that are likely high enough to get -- to achieve concentrations required in the central nervous system to get Nrf2 activation.

So moving on now to the Phase III studies of BG-12 in relapsing-remitting MS. As you know, there were 2 studies, DEFINE and CONFIRM. This now shows the design of the DEFINE study where we took patients and randomized them to receive either TID, BID, BG-12 or placebo. And as you know, these were 2-year studies. The only difference between DEFINE and CONFIRM is that a fourth arm was added, glatiramer acetate at the standard dose. The same 2 doses of BG-12 and placebo were included in CONFIRM. So those are the 2 Phase III studies. The primary and secondary endpoints of DEFINE and CONFIRM are listed on this slide. They're not -- they’re pretty standard endpoints at this by now.

In DEFINE, the primary endpoint was the proportion of patients who were relapsing and the secondary endpoints were a number of MRI endpoints, followed by annualized relapse rate. And we put disability progression as the last of the secondary endpoints because we did a closed testing procedure where we -- to control for experiment-wise error, we can only look at the subsequent secondary endpoint if the previous one were positive. So we ordered them in a certain order just to be sure that we would be able to look at all the second -- as many secondary endpoints as possible in these studies.

In CONFIRM, the annualized relapse rate was placed as the primary endpoint. We used the same 2 MRI endpoints that look at inflammation and the accumulation of lesions. We then looked at the proportion of patients who were relapsing, and again, EDSS was used for disability progression. So those are the main endpoints.

These data have been shown now at multiple meetings, including most recently at the Academy of Neurology meeting. If you look at, for example, at the annualized relapse rate in DEFINE and CONFIRM, remember, in DEFINE, it was a secondary endpoint. It was a primary endpoint in CONFIRM. We see that the annualized relapse rate in the placebo group was 0.364 and there was a 53% to 48% reduction in the rate of relapse in the DEFINE study. If we now look at CONFIRM, we see that the annualized relapse rate again about 0.4 and we see a 44% to 51% reduction compared to placebo, and the comparator Copaxone group had a 29% reduction compared to placebo, which was similar to what was seen in its Phase III study.

If we now look at disability progression, again, with DEFINE on the left side and CONFIRM on the right side, remember, this was the last of the secondary endpoints, we saw that about 27% of patients in the DEFINE study had a 1-point change in the EDSS, the same for at least 3 months compared to about 16% and 18% in the BID and TID arms resulting in a 38% to 34% reduction in disability progression and this was statistically significant. In CONFIRM, the main difference, if you look across these 2 studies, was that the proportion of patients progressing was much lower in CONFIRM, 17% compared to 27%. Nevertheless, there was a slight reduction, 21% to 24% compared to placebo in disability progression with BG-12 BID versus TID. This was not statistically significant primarily because the rate in the placebo group was lower than we had expected. There was a 7% reduction in disability progression compared to placebo with Copaxone, and remember that Copaxone does not have a disability claim in its label because it also failed to hit on disability progression in its Phase III trial.

You probably haven't seen the data shown in this way. This is where we've actually pooled the data from DEFINE and CONFIRM and looked at both BID and TID, BG-12 compared to placebo. And the way we're looking at that is, for example, here, we're looking at the annualized relapse rate in the BG-12 group and we're dividing it by the annualized relapse rate in the placebo group. So we're looking at the ratio between BG-12 and placebo. And as you can see, with BID in this circle here and TID in the triangle, with the 95% confidence interval shown by the bar, there's approximately a 40% to 50% reduction in the annualized relapse rate, that's why the ratio's around 0.5. And we see that the 95% confidence intervals don't overlap with one, so we have a highly statistically significant effect.

If we now look at the portion of patients relapse, we see something very similar. And we look at the key MRI endpoints as I listed them and we see roughly similar effect between BID and TID. Perhaps the only endpoint where there's some difference, although the 95% confidence intervals are quite wide and they overlap is in the number of enhancing lesions. And now if you look at the disability effect in the pooled data set, you see a statistically significant effect. Now I should say that we actually pre-specified this analysis in our statistical analysis plan because these days, when you fully power a study for relapse endpoints, as the primary endpoint, you're often underpowered for disability. For this reason, we pre-specified that we would look at the pooled data set in our statistical analysis plan.

Now let's turn to safety. I've tried to summarize the safety in one slide here. And I want to point out that one of the most common adverse events associated with BG-12 is flushing where we see, for example, in the DEFINE study, 38% of patients in the BID group reported flushing compared to 5% in the placebo group; and that in the TID group, it was about 32%. So clearly an increase compared to placebo in the incidence of flushing, and we saw something similar in CONFIRM. Saw a little bit, for some reason, in glatiramer acetate as well.

The next most common adverse event when you compare it relative to placebo is gastrointestinal events which include things like nausea, abdominal pain, diarrhea and it's actually pretty common even in the placebo group, but it is more common in BG-12, BID and TID and the same was seen in CONFIRM. We see no increase in infections. If you look across here. We see no increase in serious infections. We actually see a slight decrease in serious adverse events, mainly because serious MS relapses were less common with BG-12. We see no signal in terms of malignancies. And when we look at discontinuations due to adverse events, it's important to consider how many people discontinued placebo due to adverse events which was 13% in DEFINE and it was 16% in each of the 2 BG-12 arms.

So there are some tolerability issues, but very few people actually discontinue the drug due to these adverse events, and something similar was seen with DEFINE. And then also we look at withdrawals due to adverse events and the depths were rare and scattered across all treatment groups, including placebo. And as we pointed out, these 2 deaths in BG-12 due to a cycling accident and a motor vehicle accident, so unrelated to drugs. So that's a quick summary of the safety that we reported previously with BG-12. And then so we've already started to figure out how we can make BG-12 more tolerable and this study was presented at the Academy meeting. Here, we're specifically looking at the use of aspirin to reduce flushing. And so this was a sort of a Phase I type study where we looked at flushing.

And first, before I show that study, sorry, I wanted to show that in the Phase III program, if we look at the frequency of these events, flushing and GI events, they actually are most prominent in the first month. So here, in each of these graphs, we see placebo in the gray bar and BG-12, BID and TID in the blue bars. And so obviously, a big difference in the first month. But already by the second month, the events have subsided quite a lot. Still a slight difference compared to placebo and it's below 5% for the remaining months of the study.

Now if you look under panel B at the G.I. tolerability, again, a difference between placebo and BG-12 in the first month, then perhaps a slight difference still in the second month. But if you look at the subsequent months, there's really no significant difference between placebo and BG-12. So the major issue with tolerability is in the first, perhaps into the second month of treatment.

So now I want to go to the flushing study that I was about to tell you. This was a randomized double-blind, placebo-controlled study in healthy volunteers to evaluate the safety, tolerability and PK of BG-12 over 4 days with or without aspirin. And they were randomized into different dosing groups, including BG-12 doses, evaluated in the pivotal Phase III trials which were 240 BID and TID, and placebo with or without aspirin. And we used 325 milligrams of regular aspirin administered 30 minutes before each dose of BG-12. We did look at the PK profile. I'm not going to show it to you but it was unaffected by aspirin that was presented.

And the main thing we want to look at was flushing, and here, we used scales that have been used previously. For example, in niacin, can also induce flushing and investigators had used these scales to look at the flushing associated with niacin and how they could reduce that. So we used the global flushing severity scale and the flushing severity scale.

And so this slide summarizes the data from that. The global scale assesses flushing over the preceding 24 hours, whereas the flushing severity scale just measures acute flushing. And here on the left side, we're looking at BG-12 alone. First to show that even though we see an increase in flushing, it's mostly mild because scores below 4 are considered mild. So it's not like it's a huge problem but it certainly occurs with BG-12 as shown previously. But we see now that when you give BG-12, either BID or TID, with aspirin, you see that there's a substantial reduction in the severity of flushing as seen by the GFSS. And then also if you look at acute flushing with the FSS, at various time points during day 1, day 2, day 3 and day 4 after BG-12, we see that's also reduced, the acute flushing is also reduced with aspirin. So I think we have a way of addressing the flushing. And so we will be submitting that for approval. We didn't have the data in time to submit it with our initial filing but we can certainly update the label at a later time.

So moving to the third and final program that I'm going to discuss in our late stage neurology pipeline, dexpramipexole for ALS. So just to introduce ALS, it's a progressive, fatal disorder. Death typically occurs within 2 to 5 years from symptom onset and diagnosis. It's a rare disease. It occurs 1 in -- the incidence is 1 in 100,000 and the prevalence is 4 to 5 per 100,000, and the only approved therapy is Riluzole. And these are the survival data with Riluzole at 50, 100 and 200 milligrams daily compared to placebo, only to emphasize that there is definitely an effect on survival with Riluzole but it's very modest. And when you use Riluzole in the clinic, it's imperceptible to the physician and the patient whatever benefits it may have. So we need something better for ALS, and actually, Riluzole has never been shown to have any effect on function or muscle strength. So it does have an effect on survival, but not a clear effect on functional scores.

Dexpramipexole, we believe, is a mitochondrial modulator and it's in Phase III for ALS. We use dexpramipexole because using that enantiomer allows us to give the doses necessary to achieve the concentrations necessary to provide neuroprotection in the central nervous system. So we use that enantiomer to avoid the dopamine agonisms associated with pramipexole. It has demonstrated efficacy in vitro and in vivo models of neurodegenerative diseases. We think it works by increasing bioenergetic efficiency in mitochondria, and it has been shown to affect the mouse model of ALS, where SOD1, a mutant form of SOD1, human SOD1, is -- there's a transgenic animal over-expressed in the human mutated form of SOD1. Dexpramipexole gets concentrated in the brain. There's a 10:1 brain-to-plasma ratio within 180 minutes after dose.

So this was the Phase II study that was published by Cudkowicz and colleagues in Nature Medicine last year. And just to briefly go over the study, it was a relatively small study of little over 100 patients and these patients were randomized in part 1 to receive placebo twice a day or 25, 75 or 150 milligrams of dexpramipexole, twice a day. And the treatment period in Part 1 was 12 weeks. And the primary endpoint was safety and tolerability, but they also looked at the decline in the ALSFRS, the functional rating scale for ALS.

After the 12-week period, there was a 4-week washout where they were all on placebo, and the patients were then re-randomized to the lowest dose of dexpramipexole and the highest dose of dexpramipexole, 20 versus 150 BID. And by the time we got to Part 2, there were 48 patients, there were slightly under 100 patients that were enrolled in Part 2. And Part 2 was a 6-month, 28-week study duration. And then after that, patients rolled over, if they wished, into an extension study.

So this is -- this was one of the endpoints that was looked at. We're now looking at the median change from baseline in the ALSFRS during the 12-week period of part 1 and what we were struck by is that there was a nice dose-dependent effect in the rate of decline in the ALSFRS. First, we also noticed that the decline in the placebo patients was typical of other ALS studies, so there was nothing unusual about these patients. And we saw a dose-dependent decrease. This was not statistically significant. And there's arrow bars around this but -- I don't know why my slide just moved. But there was a 50% reduction in the median change from baseline in the ALSFRS score when you compare 300, the highest dose, to placebo. So that was part 1.

In part 2, the patients were randomized to the low-dose versus the high-dose. The low-dose is shown in here in the green, and the high-dose shown in the gray. There were 3 deaths in the high-dose group and 9 deaths in the low-dose group over the 6-month period. And if you plot when they died on a Kaplan-Meier plot like this, this is what you see with a trend toward an effect on survival. If we look at the hazard ratio, there could be as high as a 68% reduction. I would not count on that number because there are very small numbers of patients here. But we did see an effect, seemed to see an effect on survival in part 2, with a P-Value of 0.07.

Now the thing about death is that it hampers the way you can measure function. So when patients are getting their ALSFRS measured over time, you can look at the slope and that decline, but then when a patient dies, what do you do? You can do one of several things, you can either compute a value of 0, which is the lowest score. That may tend to overestimate or have a -- the death would have a much bigger impact on perhaps subtle changes in the slope of the ALSFRS, or you can just censor those patients and take the last value and carry it forward. The problem there is that if patients died before they decline significantly, you take that good value before the decline and you pass that forward, and you may have strange effects on the ALSFRS score.

So dealing with death was always a problem when you're looking at ALSFRS. So one thing that these statisticians did in this study was to do a combined assessment where we basically ranked people based on both endpoints where the patients who died first were ranked the lowest and you basically ranked people, all the people who died during your study. And so the first person to die gets the lowest rank and the last person to die gets the highest rank on survival. And then you start to look at the ALSFRS score, so that after the last death has been counted, then you look at the person who had the biggest decline in the ALSFRS. And then all the way to the person who had the smallest decline in the ALSFRS. So you can rank people on how well they do both on the functional rating scale and on death. And of course, the best place to be is to have the slowest decline and survive. The worst place to be is to die early.

And so using this combined assessment when you look at the 50-milligram group compared to the 300-milligram group in Part 2, and this was a prespecified endpoint, you actually see a statistically significant effect. And the reason why I point this out is that this combined assessment of function and survival is the endpoint that we are using in the Phase III trial EMPOWER, and this endpoint has been approved by regulators both in Europe and the U.S. to be used as the primary endpoint in Phase III trial of ALS.

So this is EMPOWER. We enrolled 943 patients and they were randomized to receive either placebo every 12 hours or dexpramipexole at the highest dose, 150 milligrams every 12 hours. And they're going to be treated for a minimum of 12 months, and of course, the early enrollers will continue to be followed so some of them may reach close to 18 months.

And the primary endpoint, as I've said, is the combined assessment of function and survival. And of course, we're going to look at the safety of PK, and we'll also look at other measures such as respiratory decline, change in muscle strength and quality of life. And of course, the key secondary endpoint is survival by itself.

So one of the things we wanted to do was to be sure that we reproduced as much as possible the Phase II program in our Phase III trial, and so it was key that we did our best to enroll the same kinds of patients in EMPOWER that we enrolled in the Phase II program. So I just wanted to show you the baseline characteristics of the Phase II trial, this is before they started Part 1 where we're looking at age, percentage of people who were males, the mean ALSFRS score at baseline, symptom duration, the percentage of people with bulbar onset and the percentage of people who came in using Riluzole. And when we look at the baseline characteristics of the Phase III trial, EMPOWER, we see that the age was very similar, proportion males was similar, the mean baseline score on the ALSFRS was similar, symptom duration similar, slightly more bulbar onset patients in the Phase III trial and more Riluzole use, neither of which -- actually, both were looked at for interaction in the Phase II data set and neither one of them seemed to affect the efficacy of dexpramipexole. In fact, in Part 2, there were more patients with bulbar onset in the higher dose group which did better than in the lower dose group. So we don't -- and this higher use of Riluzole reflects the fact that we -- that the Phase II trial was a North American study, and this trial includes European sites and there's more Riluzole use in Europe. So I think that we have enrolled exactly the kind of patients we want to enroll in the Phase III program, and I hope we replicate the results of the Phase II data.

So at this stage, I'm going to end and introduce Glenn Pierce, who's Head of Global Medical Affairs and our hemophilia program.

Glenn Pierce

Thanks, Al. I realize that I'm all that's standing between you and lunch, so stick with me and I will take you through an exciting late-stage hemophilia program, actually 2 of them. This is a program that got initiated about 6 years ago when we acquired an early preclinical asset at Biogen Idec, and have now taken it through Phase III. What I'd like to do is talk a little bit about the technology, and then I'll talk about prophylaxis use within hemophilia and then I'll review the actual clinical trial design that we have for both the long-lasting Factor VIII, long-lasting Factor IX.

So with regard to the technology for utilizing a well-recognized technology, Fc fusions, which have been used by a variety of different proteins over the past 15 years and have been established as a natural pathway that can lengthen the half-life of different biologics. They do that by interfacing with a receptor within cells that shuttle proteins away from a degradative pathway and toward a recycling pathway, back out into the circulation. So it's simple but evolutionarily conserved and very elegant. The purpose then of using this kind of a technology for the coagulation factors is to increase the half-life of both recombinant Factor IX, recombinant Factor VIII for really 2 different populations within the hemophilia community. First population is for patients that are on prophylaxis. These are patients that are taking regular preventative treatment to prevent bleeding episodes from occurring, and we think that this may improve the outcome by providing protection with fewer infusions, making it easier for individuals to infuse intravenously with the factor to provide that protection. And in addition, there's another population of patients that treat bleeding episodes after they start, the so-called on-demand group, and we believe that this longer-lasting therapy could provide extended protection between infusions and result in fewer repeat infusions to manage a specific bleeding episode.

The benefits of prophylaxis have been well-established over the past 50 years. They initially were proven in the Nordic regions and then more recently, in a large well-controlled clinical study here in the United States performed by Manco-Johnson and published several years ago. And what they've shown, what prophylaxis does is really to reduce the bleeding frequency, both the total bleeding frequency, as well as bleeding in the joints which causes considerable destruction in individuals with hemophilia. And this is established as preserving joint structure in young patients. MRI was used to look for joint damage, and really, over a period of just 5 years, considerable joint damage can be seen in patients who have on-demand therapy who treat after bleeding starts. And that's something I'll show on the next slide, but it is essentially ameliorated in patients who are on prophylaxis. And so prophylaxis regimens can overall increase the quality of life and really improve care in hemophilia.

This is a graph from that study. I'll take you through it. In this study, patients were studied for a period of 5 years from the initiation of prophylaxis at around age 1 through age 5. And if we look at the yellow or tan bars, these are patients who treated themselves on-demand. So when a bleed started, then they were treated with aggressive on-demand therapy, episodic therapy. And what one can see is that they have a monthly bleeding frequency that begins to go up with age, that the increase is due to increased activity and it increases due to continued destruction of the joints, which predisposed them to increased bleeding. However, in looking at the blue lines for prophylaxis, in these patients, they maintain a relatively low bleeding rate for the duration of the study, and then these are the -- this is the group of patients that really doesn't show the kind of joint damage that those on-demand patients show.

So turning to the Fc fusion technology, as I said, this is a technology that's been well-established, used in a variety of drugs over the past 15 years, and these schematics show what the Factor VIII Fc and Factor IX Fc look like. It's a single coagulation factor that is fused to a dimeric Fc. The dimer is required in order to interact with the intracellular receptor that initiates the recycling pathway for the molecules, and so by doing that, it can increase the circulating half-life. Our Fc fusion proteins in development are all fully recombinant proteins, and they're produced with the highest safety standards like all of our biogenetic proteins, including extensive viral elimination.

This slide summarizes the results of the Phase I/II studies, and what we can see for the left column, recombinant Factor IX Fc, and the right column, recombinant Factor VIII Fc, is no drug-related serious adverse events for either. One patient in each study had an abnormal taste in his mouth at the time of dosing, and the patient in the recombinant Factor IX Fc study, the same patient actually reported a headache on the dosing day. In this single drug administration, we saw no evidence of inhibitors or anti-drug antibodies in this study, no allergic reactions in any of the patients in the study. We saw dose linearity when we looked at the pharmacokinetic data in both products and then saw an approximate threefold increased half-life compared to historical BeneFIX data for the recombinant Factor IX Fc and about a 50% to 70% increase in half-life for the recombinant Factor VIII Fc when it was compared to Advate. And both of these studies were published earlier this year in Blood, so the full details are available there.

I want to turn to half-life for a couple of moments and talk a little bit about what we look at when we analyze patients in their half-lives. The dark blue bar is the average half-life for individuals with Factor VIII deficiency who would receive a amount of Factor VIII designed to take them to 50% of normal. And so what one can see is that they reach a 1% trough level, which is a major measure in this case, in a little after 2 days, requiring 3x a week dosing for these patients. However, this is an average patient, and patients are heterogeneous in their half-lives and in their pharmacokinetic parameters. So there are a number of patients that have much shorter half-lives than 12 hours and a number of patients that have longer half-lives than 12 hours. And so they'll have proportional differences in when they reach that 1% threshold. But what we hypothesized and what we were able to demonstrate in the initial studies was that with long-lasting products, all of these curves move out to the right. And so that's the important point here, is that we can change the dosing parameters in each of the patients regardless of what their initial half-lives are.

This graph shows this in a little different way. And there are 2 ways to increase half-life. One way is to increase the amount of Factor VIII that's present in the circulation, one way is to increase the dose, and the second way is to increase the half-life, design a new molecule that will have a longer half-life. With short-acting factors that have a half-life of 12 hours on average, it's difficult to increase the dose, and what this shows is that dosing a patient at about 50 units per kilogram, which takes the patient to about 100% of normal, every 12 hours, that patient's levels decline by 50%. And so it won't last more than 2 to 3 days. However, in order to achieve weekly dosing in that patient, one would have to administer over 8,000 units per kilogram, which is clearly not possible to do. So for shorter-acting factors, increasing the dose really doesn't accomplish a lot and one has to move to increasing the half-life in order to be able to decrease the dose frequency.

On the basis of the results from the Phase I/II study, we advanced both of these products to pivotal Phase III studies, and that's what I'll talk a little bit about now. The objectives for both of the Phase III programs were to establish the basis for approval in United States, Europe, as well as in a number of other geographies worldwide. And it really was designed to look at the control and prevention of bleeding or prophylaxis, use in surgery and then use in the pediatric population. We were looking to establish different dosing parameters that would be safe, as well as effective for the patients, and explore individualized treatment regimens utilizing these longer-lasting products.

With regard to regulatory status, we have achieved orphan drug designation for both products in both the United States and European Union, as well as fast-track status for both products in the United States. The United States doesn't have a series of specific guidelines the way the European Union does for coagulation factors, but we have reviewed our development plans extensively with the regulatory authorities and have developed the final protocols in consultation with the FDA.

With regard to the FDA for approval, the FDA requires data in an adult population, which is defined as 12 and above for these purposes in both the general hemophilia population, as well as in the surgical setting, and does not require pediatric data, which is below the age of 12 for approval.

With regard to Europe, the final Factor VIII and Factor IX guidance was issued in July and in final form at the beginning of this year, and it's very detailed in its guidance, but it also points to the fact that pediatric trials must be completed before filing.

If we look at the table that's at the bottom, what the EU requires in adults or patients greater than or equal to 12 is only 50 Factor VIII patients, 20 Factor IX patients. For purposes of looking for inhibitors, the FDA required a higher number of patients, and so that's why our trials contain more than the minimum number. However, for the pediatric trials under 12, we need a total of 50 patients, 50 Factor VIII deficient patients and a total of 20 Factor IX deficient patients. And it's a sequential approach, we start with the adults and then when have achieved certain measure of safety in the adults, then we move to children who have previously then received products through age 11, and then once we have completed a certain amount of safety there, then either at that time or in post-marketing, we're able to study patients who are previously un-transfused, who are essentially newly diagnosed with hemophilia.

So this brings us to our next steps. We are now enrolling in our Kids B-LONG and Kids A-LONG studies, which started in the first half of this year. And then as patients in B-LONG and A-LONG have rolled off the current Phase III studies, they have been eligible to enroll in our extension studies, termed ASPIRE and B-YOND, in order to continue to generate safety data, long-term safety data prior to approval. And those studies are also ongoing now.

So now I'll turn more specifically to each of the products and the design of the Phase III studies. Starting with the recombinant Factor VIII Fc, these are the data that were published earlier this year and presented last year at the ISTH meeting in Kyoto. And I'm only showing the half-life data here for the patients. Two dose groups, 25 and 65 units per kilogram, and we had an average half-life of about 18 to 19 hours for the recombinant Factor VIII Fc patients. And the Advate patients had a half-life of 11 to 12 hours when they were directly compared, giving a 50% to 70% increase in half-life for the recombinant Factor VIII Fc patients. We looked at the patients individually who received both of the products, and we noted several things. First, patients who had a shorter half-life on Advate had a shorter half-life with the Factor VIII Fc. Second, patients who had a longer half-life on Advate had a longer half-life with the recombinant Factor VIII Fc, and then finally, all of the patients who had a longer half-life on Factor VIII Fc than Advate. And so this gave us the basis for developing the Phase III clinical study.

The Phase III study has taken place in 19 countries, 60 different sites, with approximately 165 subjects enrolled in the total study. We had planned for 25 countries and 90 sites. We had somewhat unexpected interest and enrollment rates that surpassed expectations, and so before some of the sites and some of the countries could gain an approval, we needed to close the study.

The A-LONG study objectives were: first, to evaluate safety, namely, looking for inhibitor generation within the patients; second, to confirm and extend all of the pharmacokinetic data that we obtained in the Phase I/II between Advate and the recombinant Factor VIII Fc; and then to establish efficacy for 2 preventative treatment regimens that I'll get into on the next slide; as well as to obtain data to support on-demand dosing, so the treatment of bleeding episodes, how effective is the product to actually stop bleeding and then the major challenges, how effective is the product when it's used in major surgery. And so that requirement is also part of the registration process.

These are the 3 arms for the A-LONG study. The first arm is what's called a tailored prophylaxis regimen. Patients start off receiving recombinant Factor VIII Fc twice a week, and then in a PK-driven manner, their interval is evaluated and potentially extended depending upon the PK results to keep the patients at trough levels between 1% and 3% of normal. A subset of patients in this study also underwent repeated sequential PK, similar to what we did in the Phase I/II with Advate versus the recombinant Factor VIII Fc to extend those data as well.

And then next, we randomized patients to arms 2 and 3. Arm 2 is a weekly dosing regimen where patients receive a relatively high dose of recombinant Factor VIII Fc designed to take them to perhaps 130% of normal on average, and they receive this for up to a year. And the annualized bleeding rate is evaluated in this arm. And then the other part of this randomization is patients who were randomized to an on-demand arm. All of the patients in these 2 groups started off as on-demand patients, and so this will allow us to directly compare the 2 regimens. And these patients are treated for up to a year with their bleeding episodes. These patients in arm 1 are also treated for a minimum of 50 exposures in order to get the kind of robust data that we need for inhibitor detection. And then a surgery, a group of surgery patients comes out of any of these 3 arms. These are major surgery patients that are required.

The inclusion and exclusion criteria are very straightforward. I've got a subset of them listed here on this slide. Patients have to have severe hemophilia A, defined as less than 1% recombinant -- sorry, less than 1% Factor VIII coagulation activity. They need to be 12 years of age or older and have had at least 150 exposures to previous Factor VIII products. Exclusion, the principal important one here is no history of an inhibitor.

The trial endpoints are also straightforward and consistent with the kinds of trial endpoints that are utilized in these types of studies. Primary outcome measures include safety, looking primarily for the incidence of inhibitor development, the median annualized number of bleeding episodes, both spontaneous, as well as traumatic bleeds, and then all of the associated PK parameters that I've alluded to.

A number of important secondary outcome measures are shown here, looking at preventative treatment, looking at the dose regimens for the patients that are in the 2 preventative arms; in the on-demand arm, looking for the response to the bleeding episodes that are treated; and in the surgery arms, looking at the ability in major surgery to achieve hemostasis.

This looks historically at a number of studies that have been published over the last decade and looking at prophylaxis studies, as well as on-demand studies and looking at the differences in the annualized bleeding rate in these studies. And what one can see is that the amount of breakthrough bleeding that occurs in patients in a variety of studies on prophylaxis regimens is generally in the single-digit range, and the amount of bleeding that occurs in patients who treat their bleeding episodes and are not on prophylaxis is in the every 1- to 2-week range over a course of a year. And so there's a large difference between those 2 rates in individuals on those 2 distinct treatment regimens.

That moves us to the Kids A-LONG study, which, as I said, is now ongoing. This is a simple study with a single treatment arm. The outcome measure is frequency of inhibitor development. Secondary measures include looking at the annualized bleeding rates. And these patients, a total of about 50, are all placed on a prophylaxis regimen.

I'll now turn to more detailed analysis of the recombinant Factor IX Fc studies. This Phase III trial occurred in 19 participating countries, 50 sites overall, with about 128 subjects enrolled in the study. We had planned on 20 countries with 75 sites, but once again, we saw increased interest, and the enrollment rate went fast enough that some of the sites were unable to get approval and join before we closed the study.

The B-LONG study objectives are very similar to the ones I showed for A-LONG, so I won't go through all of them. They largely are to look at safety, as well as PK differences between BeneFIX and the recombinant Factor IX Fc and then looking at efficacy in 2 different preventative treatment regimens that I'll cover.

This is the design of the Phase III study. We initially, in a subset of patients, have performed sequential pharmacokinetics in BeneFIX, utilizing BeneFIX, subsequently utilizing the recombinant Factor IX Fc to obtain a sufficient number of patients for comparison purposes. And then the remaining patients in this group received nonsequential PK, just PK for the recombinant Factor IX Fc.

This is a weekly treatment regimen, and it is a PK-driven dosing. So once the PK results were obtained, patients received doses ranging from 20 to 100 units per kilogram, depending upon their pharmacokinetic evaluation, making sure that they maintained a trough level of 1% to 3% above baseline. And then for arm 2, we fixed the dose in arm 2 and we treated all of the patients in arm 2 with 100 units per kilogram, which took them to approximately 100% of normal. And then we also did a PK-driven analysis and individualized their dosing regimens so that we would retreat them once they achieved the trough of 1% to 3%. And so these patients were not on a fixed interval, they were on an interval that was dictated by their pharmacokinetic parameters that extended beyond the 1 week seen in arm 1, and these patients were also treated for up to 50 weeks. Arm 3, similar to Factor VIII, is an on-demand regimen where patients take the appropriate dose in the recombinant Factor IX Fc, depending upon the severity of the bleeding episode under treatment. And then finally, this study had a separate surgery arm where we were able to enroll directly into surgery, into the study. And this is major surgeries and the dosing was appropriate to the type of major surgery that the patients underwent. And so once these patients were finished with surgery, they could then enroll into one of the other arms and finish the trial if they desired.

The B-LONG study population is similar in terms of inclusion and exclusion with the A-LONG inclusion/exclusion. In this case, the cutoff for inclusion was less than or equal to 2% Factor IX coagulation activity, but the other parameters are similar, more than 12 years of age or older. And in this case, at least 100 exposure days to a previous Factor IX product. And then on the exclusion side, no history of inhibitors and no prior history of anaphylaxis either.

Our B-LONG trial endpoints are also similar to the A-LONG trial endpoints, safety and tolerability first and looking at the annualized number of bleeding episodes. Secondary outcome measurements included looking at the dose regimens for these patients, as well as looking at response in on-demand therapy, as well as in the major surgery response to treatment.

Fewer studies have been run over the last 10 years or so for Factor IX and for Factor VIII, but what we can see looking at prophylaxis studies and one on-demand study is low single-digit breakthrough bleeding in patients who are on prophylaxis regimens and approximately 15 bleeds a year on average for patients who are on on-demand therapy in this case.

This brings us to the Kids B-LONG study, and it's very similar to the Kids A-LONG study. Our primary outcome measurement is inhibitor development, secondary, looking at annualized bleeding rates, single arm study. Approximately 20 patients, and that study is ongoing.

So to summarize the program status, both the Phase I/IIs have been completed and reported and published. The Phase III pivotal studies have been closed to enrollment and will shortly be ending. We will be doing the data readouts in the second half of 2012, and we initiated our pediatric studies for both of these products in the first half of 2012.

With that, I'll close and thank you. And I think Wendy's going to make some announcements about lunch.

Wendy Gabel

Thanks, everyone. We are going to take about a 15-minute break, so you can grab some lunch and take a break, make a phone call. Come back at 12:15, and that'll give us about half-hour for questions from all of our speakers. Thanks a lot.

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