Company Reports

We think Biogen's neurodegenerative and rare disease portfolio supports a narrow moat. Biogen's strategy has its roots in the 2003 merger of Biogen (Avonex for treating multiple sclerosis, or MS) and Idec (classic blood cancer drug Rituxan). The firm expanded its neurology portfolio beyond MS, including the blockbuster Spinraza for spinal muscular atrophy, or SMA, a rare neuromuscular disease. We see Biogen as a firm in transition, as MS revenue fades and new drugs for Alzheimer's, depression, and rare diseases begin to ramp up.

Biogen's second-quarter revenue grew 3% and non-GAAP earnings per share fell 34% year over year. However, management raised full-year guidance for non-GAAP EPS to $15.85-$16.85, or $0.60 higher at the midpoint.

Biogen and Ionis reported nuanced phase 2 data for diranersen in early Alzheimer's disease at the Alzheimer's Association International Conference, which sent shares down 8% and 3%, respectively, on July 14. Biogen holds global commercialization rights, while Ionis is eligible for tiered royalties.

Biogen reported 2% year-on-year revenue growth and 31% non-GAAP EPS growth. Management also updated full-year EPS guidance to $14.25 to $15.25, reflecting $1.00 per share of acquired in-process research and development expense. Shares rose 6% April 30 from the previous day's close.

We think Biogen's neurodegenerative and rare disease portfolio supports a narrow moat. Biogen's strategy has its roots in the 2003 merger of Biogen (Avonex for treating multiple sclerosis, or MS) and Idec (classic blood cancer drug Rituxan). The firm expanded its neurology portfolio beyond MS, including the blockbuster Spinraza for spinal muscular atrophy, or SMA, a rare neuromuscular disease. We see Biogen as a firm in transition, as MS revenue fades and new drugs for Alzheimer's, depression, and rare diseases begin to ramp up.

Biogen reported a 7% year-on-year decline in revenue for the quarter and 2% growth for the full year. Full-year non-GAAP earnings per share was $15.28, a 7% decline, and guidance for 2026 is $15.25-$16.25.

Biogen reported 3% year-on-year revenue growth and 18% non-GAAP earnings per share growth. Sales of Leqembi (Alzheimer's disease, or AZD) in the US were $69 million, or 9.5% sequential growth. Management lowered its full-year guidance range for non-GAAP EPS by 6% (using the midpoints) from July.

We think Biogen's neurology, immunology, and focus on rare diseases support a narrow moat. Biogen's strategy has its roots in the 2003 merger of Biogen (Avonex for treating multiple sclerosis, or MS) and Idec (classic blood cancer drug Rituxan). The firm expanded its neurology portfolio beyond MS, including the blockbuster Spinraza for spinal muscular atrophy, or SMA, a rare neuromuscular disease. We see Biogen as a firm in transition, as MS revenue fades and new drugs for Alzheimer's, depression, and rare diseases begin to ramp up.

Biogen reported 7% year-on-year revenue growth and 4% non-GAAP earnings per share growth. Sales of Leqembi (for Alzheimer's disease) in the US were $63 million, or 21% sequential growth. Management lifted its full-year guidance range for non-GAAP EPS by 5% (using the midpoints) from May's level.

Biogen reported 6% year-over-year growth which was aided by the timing of Spinraza (rare disease) shipments. In-market sales of Leqembi (Alzheimer's disease) were $96 million. The company lowered 2025 guidance due to an upfront payment to Stoke, but its underlying business outlook is unchanged.

Narrow-moat Biogen reported results that were in line with our expectations. Revenue guidance for 2025 is a mid-single-digit decline at constant currency, which we find slightly disappointing. We are lowering our fair value estimate to $220 per share from $303 due to lower forecasts for key drugs, especially Alzheimer’s drug Leqembi. There is a wide range of outcomes for its peak revenue. Still, due to its slow sales ramp and the potential for competing drugs to eventually enter this space, we adopt a more cautious view and lower our peak revenue forecast to $3 billion from $6 billion.

We think Biogen's neurology, immunology, and focus on rare diseases support a narrow moat. Biogen's strategy has its roots in the 2003 merger of Biogen (Avonex for treating multiple sclerosis, or MS) and Idec (classic blood cancer drug Rituxan). The firm expanded its neurology portfolio beyond MS, including the blockbuster Spinraza for spinal muscular atrophy, or SMA, a rare neuromuscular disease. We see Biogen as a firm in transition, as MS revenue fades and new drugs for Alzheimer's, depression, and rare diseases begin to ramp up.

Following President-elect Donald Trump’s Nov. 14 announcement of the nomination of Robert F. Kennedy Jr. as secretary of the US Department of Health and Human Services, there have seen several more nominations for leadership in the 13 HHS divisions, including Dr. Mehmet Oz (Centers for Medicare and Medicaid Services) on Nov. 19, Dr. Marty Makary (US Food and Drug Administration) and Dr. Dave Weldon (Centers for Disease Control and Prevention) on Nov. 22, and Dr. Jay Bhattacharya (National Institutes of Health) on Nov. 26. Overall, we think these selections show a consistent theme of introducing potential disruptive forces to US healthcare, although their lack of experience and the power of career staffers in these agencies could serve to blunt any significant proposed changes. We continue to see obesity drugs and vaccines as areas of potential scrutiny, although without any clarity on proposals, we’re not making any changes to our fair value estimates following these announcements.

President-elect Donald Trump announced on Nov. 14 that he is nominating Robert F. Kennedy Jr. to be secretary of the Department of Health and Human Services under his new administration in 2025. RFK Jr. has strong views on public health and, if confirmed, could use his position to make changes at several of the 13 HHS divisions. In our Nov. 8 note, we discussed the potential tailwinds of a Trump administration, including possible repeal of the Medicare negotiation provision in the Inflation Reduction Act, less Federal Trade Commission scrutiny of acquisitions, and a likely continuation of lower corporate taxes. However, if RFK’s nomination is confirmed, we expect more “wild card” headwinds to the industry will come to fruition. As the HHS covers the US Food and Drug Administration and the Centers for Disease Control and Prevention, an HHS secretary skeptical of vaccine and obesity drug benefits could work to erode public trust, put up roadblocks for approval of new vaccines, and prevent the CDC from recommending any vaccines that make it through the approval process. With less federal guidance, we think it is possible certain states could waver in support of broad mandates for childhood vaccines. All of these could weigh on sales of vaccines in the US, including covid vaccine makers Moderna and BioNTech and big biopharma vaccine makers like GSK (we model 14% of GSK revenue from US vaccine sales in 2024), Pfizer (12%), Merck (9%), and Sanofi (6%).

We think that President-elect Donald Trump brings a mix of potential headwinds and tailwinds to the biopharma industry, and we’re not making any adjustments to our fair value estimates at this time. We had previously assumed that the most likely case was split control of the presidency and Congress by Democrats and Republicans. However, with Republicans locking in control of the Senate and holding a lead in elections in the House, we think it looks increasingly likely that Trump and his party could have control across both branches of government, making any potential policy priorities more likely to be implemented.

Narrow-moat Biogen reported results that were in line with our expectations, which reflects encouraging improvement in operating profit margins. Additionally, the company slightly raised its full-year guidance for operating income to grow at a high-teen percentage from the last quarter's mid- to high-teen percentage. We maintain our fair value estimate of $303 per share but note that Leqembi, a crucial piece of Biogen's story, is not yet derisked and remains a source of considerable uncertainty.

We think Biogen's neurology, immunology, and focus on rare diseases support a narrow moat. Biogen's strategy has its roots in the 2003 merger of Biogen (Avonex for treating multiple sclerosis, or MS) and Idec (classic blood cancer drug Rituxan). The firm expanded its neurology portfolio beyond MS, including the blockbuster Spinraza for spinal muscular atrophy, or SMA, a rare neuromuscular disease. We see Biogen as a firm in transition, as MS revenue fades and new drugs for Alzheimer's, depression, and rare diseases begin to ramp up.

We’re maintaining our $303 fair value estimate for Biogen following mixed results in the second quarter. Biogen’s flat second-quarter revenue reflected a combination of generic and biosimilar headwinds on older multiple sclerosis drugs but also a strong launch of rare-disease drug Skyclarys, and cost controls helped secure 30% non-GAAP operating income growth (43% growth including the proceeds from the sale of a priority review voucher). We still think Biogen has a long road to recovery ahead of it, particularly given the slow launches of Alzheimer’s drug Leqembi and postpartum depression drug Zurzuvae.

We're lowering Biogen's moat rating to narrow from wide after reassessing the firm's competitive advantages. As the firm faces steady pressure on its older multiple sclerosis drugs from generic and branded competitors, we think returns on invested capital will be under pressure, particularly as Alzheimer's drug Leqembi (via a collaboration with partner Eisai) has launched more slowly than we had expected. We still think global Leqembi sales will eventually surpass $6 billion, but we see high uncertainty around this estimate and around our Biogen valuation more broadly. We assume that Biogen’s share of revenue (from partner Eisai) won’t be significant until 2025 as Biogen and Eisai are in the process of boosting their marketing efforts and expanding approval to include maintenance and subcutaneous dosing.

We think Biogen's neurology, immunology, and focus on rare diseases support a narrow moat. Biogen's strategy has its roots in the 2003 merger of Biogen (multiple sclerosis drug Avonex) and Idec (cancer drug Rituxan). The firm expanded its neurology portfolio beyond MS, including the blockbuster rare neuromuscular disease drug Spinraza. We see Biogen as a firm in transition, as MS revenue fades and launches of several new drugs for Alzheimer's, depression, and rare diseases begin to ramp up.