Biogen faces a challenging financial outlook as Needham downgrades the stock, projecting flat revenue until 2026. The primary concern revolves around the slower-than-anticipated uptake of Leqembi (lecanemab), Biogen's Alzheimer's drug developed in collaboration with Eisai. This projection tempers market expectations despite recent positive developments, including a positive opinion from the European Medicines Agency (EMA) for lecanemab in early Alzheimer's disease.
Leqembi's Sales Growth Under Scrutiny
Leqembi's third-quarter global in-market sales totaled approximately $67 million, with $39 million originating from the U.S. market. However, Needham's analysis suggests that physician feedback and expert opinions indicate a continued slow pace of adoption. This sluggish growth is a critical factor in the revised revenue projections, as the market's initial expectations for Leqembi's performance were significantly higher.
Skyclarys and Zurzuvae: Promising but Not Enough
While new products like Skyclarys and Zurzuvae show promise, their growth is not expected to immediately offset the decline in Biogen's existing business. Needham projects Skyclarys' fourth-quarter sales to reach approximately $116 million and $608 million for 2025. Skyclarys, acquired through the Reata acquisition, generated $102.3 million in revenue during the third quarter. Zurzuvae, a postpartum depression drug, recorded $22 million in sales during the same period.
Financial Projections and Strategic Considerations
Needham anticipates revenues to decline slightly in 2024, remain stable in 2025, and increase by approximately 3% in 2026, contingent on sustained growth from key product launches. Operating margins are expected to improve by 80 basis points in 2025, driven by the Fit for Growth program. However, this improvement is already factored into market expectations. Business development activities could potentially bolster growth in the short to medium term, but the timing and nature of such deals remain uncertain.
The analyst has downgraded Biogen's stock from Buy to Hold, removing the previous price target of $270. This reflects a more cautious outlook on the company's near-term growth prospects, primarily due to the challenges in scaling Leqembi sales and the time required for new products to significantly impact overall revenue.
