Biogen Faces Challenges Amid Pipeline Setbacks and Sales Slowdown

Jefferies has downgraded Biogen Inc (NASDAQ: BIIB), highlighting difficulties the company is currently facing.

Sales growth for Leqembi (lecanemab) has been underwhelming, remaining below market expectations as we look towards 2030.

Several obstacles, including issues with PET scan reimbursement, slow updates to protocols at major hospitals, and the challenge of identifying eligible patients, are impeding the widespread adoption of Leqembi.

Despite these setbacks, the analyst from Jefferies notes that there is limited downside potential at the current price. They suggest that continued advancements in Biogen's product pipeline, new regulatory approvals, and a successful rollout of lecanemab could possibly elevate the stock price to around $350.

Furthermore, Jefferies points out that the company's strategic options, especially during the transition of CEO, may serve as a cushion should the stock price decline to approximately $175.

Biogen acknowledges the varied nature of these challenges, stating that they differ from one hospital or office to another, which complicates their efforts to address these issues promptly.

In the meantime, competition is rising. Eli Lilly And Co (NYSE: LLY) has launched Kisunla (donanemab), which shows strong initial sales performance, including some significant inventory stocking.

Jefferies has revised Biogen’s rating from Buy to Hold and has adjusted the price target downwards from $250 to $180.

The analyst remarks that there is a lack of exciting new developments that would draw investor attention towards Biogen. While the company holds the potential for $7-10 billion in business development, achieving tangible results from these efforts will require time.

A notable concern arises for Biogen in 2030, when its royalties from Ocrevus could decrease by over 50%. This decrease, which currently contributes around $1.5 billion annually, could potentially reduce Biogen's earnings per share by 20-30% due to the anticipated approval of biosimilars.

Jefferies suggests that Biogen may look to acquire smaller, specialty commercial areas to bolster its portfolio.

In 2024, Biogen encountered numerous setbacks in its pipeline, notably with programs for ALS, tremor, and Angelman syndrome.

However, there are two noteworthy developments: felzartamab is entering Phase 3 trials for IgA nephropathy, and dapi has begun a second Phase 3 trial for lupus. Though both present promising opportunities, the results will not be available for several years, projected between 2027 and 2029, and they will be entering highly competitive markets. Therefore, these drugs are unlikely to alleviate the concerns regarding Biogen’s earnings growth from 2025 to 2030.

Price Movements: As of the most recent update, BIIB shares are trading at $158.06, showing a slight increase of 0.18%.

Future Developments:

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