Biogen Faces Downgrade Amid Pipeline Struggles and Slow Leqembi Sales

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

Sales growth for Leqembi (lecanemab) is noticeably sluggish, falling short of market expectations through the year 2030.

Several factors are impeding the adoption of Leqembi, including issues with PET scan reimbursements, slow updates to protocols at major hospital networks, and difficulties in identifying eligible patients.

The analyst suggests that while the current valuations of Biogen have limited downside, the company must continue to make progress in its pipeline, achieve regulatory approvals, and ensure a successful launch of lecanemab to potentially increase the stock price to around $350.

In a notable shift, Jefferies has changed Biogen's rating from Buy to Hold, reducing the price target for the stock from $250 to $180.

Jefferies also points out that there is a lack of groundbreaking new developments within Biogen that could attract investor attention at this time. Analysts noted that, despite the company having a financial capacity of $7 to $10 billion for business deals, these opportunities may take time to bear fruit.

A significant risk looms in 2030 when royalties from Ocrevus—currently valued at $1.5 billion annually—are projected to diminish by more than 50% due to the FDA's approval of biosimilars. This reduction could result in a 20-30% decrease in Biogen's earnings per share.

Jefferies highlights that Biogen might consider pursuing acquisitions in specialty commercial sectors as a response to its current challenges.

Biogen's pipeline has encountered several setbacks, particularly in trials focusing on ALS, tremor, and Angelman syndrome in 2024.

However, there are two promising late-stage programs to note: felzartamab, which is entering Phase 3 trials for IgA nephropathy, and dapi, which is launching a second Phase 3 trial targeting lupus. Despite their potential, results from these trials will not be available until 2027-2029, and they will be entering fiercely competitive markets. Consequently, these drugs are unlikely to alleviate concerns regarding Biogen's earnings growth from 2025 to 2030.

As of the most recent report, BIIB stock has seen a slight increase of 0.18%, trading at $158.06.

Biogen, Leqembi, downgrade