Despite launching the first Alzheimer’s disease-modifying drug, Biogen’s actions have not reflected the monumental scientific achievements of the past year. The stock has fallen more than a third since hitting a high of $267 in early January, reflecting investors’ concerns about the company’s future. The stock opened at $171 on Tuesday.

While Leqembi is making progress, the launch has been slow and competition has entered via Eli Lilly’s Kisunla. Biogen has a few tricks up its sleeve for future pipeline options, particularly the much-discussed Alzheimer’s follow-up BIIB080, but overall investors are taking a cautious approach.

“Biogen remains a contrarian stock as investors are skeptical about Alzheimer’s and the pipeline,” Stifel analysts wrote following Biogen’s third-quarter earnings conference call on June 30. october.

But many analysts, including Stifel, say now is a good time to buy Biogen stock, urging investors to look at the bigger picture.

Below, we look at five major drags on Biogen’s stock price.

Leqembi Headwinds

As the world eagerly awaited a new option for treating Alzheimer’s disease, Leqembi’s revenues remained below expectations as Biogen worked to support the product’s launch. The drug grossed $67 million in the third quarter, including $39 million in the United States.

The company told investors it wasn’t a question of demand, but that health systems simply hadn’t adapted. Patients do not receive the necessary PET scans to begin treatment and the infusion time can be tedious.

Biogen expects its sales to continue to grow quarter over quarter and is trying to speed up the process by planning a subcutaneous formulation, while wider use of blood diagnostics could help reduce the need for invasive PET scans. The company has also just strengthened its sales force in the market, with new troops on the ground starting September 1.

Although Leqembi is making sales, it still costs Biogen and its partner Eisai a pretty penny to support the launch. Spending on the drug totaled $242.3 million for partners, a figure that dwarfs global sales.

The drug is still not approved in Europe after regulators rejected it. It is expected to be reviewed next year.

Looking even further, Biogen is testing Leqembi in a Phase III trial called AHEAD 3-45 to prevent or delay Alzheimer’s disease in preclinical or asymptomatic patients. Recruitment ended in October with 1,400 patients. This could significantly increase the patient population.

Biogen also now faces Eli Lilly after rival Alzheimer’s drug Kisunla was approved earlier this year. But analysts at William Blair have suggested that the arrival of a second anti-amyloid drug could actually be a net benefit. Leqembi could differentiate itself due to its reduced incidence of amyloid-related imaging abnormalities (ARIA), a major safety concern that can suggest bleeding in the brain.

“From an equities perspective, we recognize that the launch will continue to be a ‘demonstration’ story and will be difficult to get ahead of (the same could be said for equities); however, given Biogen’s valuation, we continue to see upside from growth in the Alzheimer’s franchise,” William Blair wrote.

Pipeline

Analysts have been unimpressed with Biogen’s early plans, advocating more business development in order to add additional assets to the queue.

But Jefferies noted some recent glimmers of hope thanks to felzartamab, a drug acquired in the United States. HI-Bio transactionin IgA nephropathy (IgAN) linked to chronic kidney disease. The company presented phase II data in late October confirm stable kidney function and lasting therapeutic effects more than 18 months after the final dose. Biogen will expand felzartamab into phase III trials in IgAN, antibody-mediated kidney transplant rejection, and primary membranous nephropathy next year.

Dapirolizumab pegol, in partnership with UCB, is also entering a phase second phase III trial after meeting the primary endpoint of a late-stage trial in systemic lupus erythematosus (SLE). The drug demonstrated clinical improvement in patients with moderate to severe disease in the Phase III PHOENYCS GO trial. The clinical program will now expand with the second study to address patients with unmet needs in SLE.

“While both are positive developments overall, the data is way off and both have low expectations but could surprise on the upside if positive,” Jefferies wrote of felzartamab and dapirolizumab pegol.

Biogen also has a significant pipeline of products in Alzheimer’s disease, in particular BIIB080, which addresses tau pathology in a phase II trial. Registrations are complete but data is not expected before 2026.

William Blair noted that executives estimated the pipeline would have a peak revenue potential of $14 billion.

Launching into the unknown

It’s not just Alzheimer’s disease for which Biogen is opening new avenues. Truist Securities noted that new products Qalsody for ALS, Skyclarys for Friedreich’s ataxia (FA), and Zurzuvae for postpartum depression are all recently approved Biogen drugs in indications where there is little precedent.

“Biogen is building a market in each case where no infrastructure existed before,” Truist wrote. That’s a difficult task for any company, even the size of Biogen.

But if anyone can do it, it’s Biogen. BMO Capital Markets said: “Biogen has developed significant prowess in the commercial execution of its rare disease portfolio. » This includes Spinraza for spinal muscular atrophy and Skyclarys for FA, and to a lesser extent Qalsody for ALS. Biogen is likely to reap the benefits of these programs eventually, but investors should be patient, analysts warn.

“3Q24 earnings highlighted that growth in these assets likely will not happen overnight and that additional business development may be necessary to drive more robust revenue expansion,” BMO wrote Capital markets.

Sales of Spinraza fell $67 million to $381 million in the third quarter, which Biogen attributed to the loss of an annual tender in Russia. The drug also suffered from competition from Novartis’ Zolgensma gene therapy. Biogen hopes that Spinraza can return to growth, potentially in combination with Zolgensma. Other emerging competitors include Evrysdi, Genentech’s oral treatment.

“Many patients return to SPINRAZA after switching to a competitor and realize that the effectiveness may not be there,” said Alisha Alaimo, director and president of Biogen, North America.

Multiple Sclerosis Franchise

Although the company has long been known for its multiple sclerosis franchise, that part of the business has been in decline for several quarters as Biogen heads toward a steep patent cliff. The portfolio declined 9% to $1.05 billion in the third quarter due to “competitive dynamics,” according to CFO Mike McDonnell. A patent for Tecfidera is set to expire in February 2028. Tysabri has seen biosimilar newcomers in Europe; the same has not yet happened in the United States, but competition will soon arrive for these patents.

Although this problem is not new, Biogen may need to take major business development steps to overcome it. “While management is not supportive of purchasing revenue to fuel growth, this may become a more attractive option as the MS franchise continues to erode,” BMO wrote.

Deal or no deal

With all this uncertainty, Jefferies said investors want to see more deal activity to ensure the company’s sustainability, even though Biogen has been very acquisitive. He picked up Reata Pharmaceuticals for $7.3 billion in September 2023 and HI-Bio for $1.15 billion in July.

“Biogen continues to have several assets that could drive growth in the future (Spinraza, Skyclarys, etc.), but investors may simply need to be more patient to see this robust growth, or wait for more transformative development ( business development) – a possibility. management appears more and more comfortable with each quarter,” BMO Capital Markets wrote.

Biogen said it has about $8 billion to $10 billion to spend on partnerships or acquisitions to complement its growth. CEO Chris Viehbacher said the company has a “long history in the neurology and neuroscience space,” suggesting the deals could deviate from those traditional areas of focus. He’s also pleased with Biogen’s work in immunology, especially given its $1.15 billion buyout of HI-Bio earlier this year. But there remain many opportunities for business development in this area.

Viehbacher suggested that rare diseases are an area where Biogen has the capacity to do more while avoiding big pharma’s saturated indications like atopic dermatitis or rheumatoid arthritis.