Biogen faces a challenging growth outlook, with Needham downgrading the stock and projecting flat revenue until 2026. This projection is largely attributed to the slower-than-anticipated uptake of Leqembi (lecanemab), Biogen's Alzheimer's drug, and the time required for new products to compensate for declines in existing business.
Leqembi's Market Performance
Leqembi's third-quarter global in-market sales totaled approximately $67 million, including about $39 million in the U.S. However, physician feedback and expert opinions indicate that the sales growth is expected to remain gradual. This slow pace is tempering market expectations, which analysts believe are currently set too high. Despite a positive recommendation from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) for lecanemab in early Alzheimer’s disease, significant revenue impact is not expected immediately.
Skyclarys and Zurzuvae Contributions
Skyclarys, acquired through the Reata acquisition, generated revenues of $102.3 million during the quarter. Needham projects Skyclarys' fourth-quarter sales to reach approximately $116 million and $608 million for 2025. Management has indicated that U.S. sales growth may be uneven, while international growth could be slower due to pricing negotiations and a gradual increase in the number of patients on treatment. Zurzuvae, a postpartum depression drug, recorded third-quarter sales of $22 million.
Financial Projections and Analyst Ratings
Needham anticipates that Biogen's revenues will remain flat or decline slightly until 2026. This is based on the expectation that it will take time for new products like Leqembi, Skyclarys, and Zurzuvae to achieve sufficient growth to offset the decline in existing business. Revenues are projected to fall by a small percentage in 2024, remain stable in 2025, and increase by about 3% in 2026, assuming continued growth from key product launches. Operating margins are expected to improve by 80 basis points in 2025, driven by the Fit for Growth program. Consequently, Needham has downgraded Biogen's stock from Buy to Hold, removing the previous price target of $270.
