Biogen Expects Alzheimer’s Drug Leqembi To Face A Key 2023 Headwind

Biogen (BIIB) stock was hamstrung Wednesday on a mixed 2023 outlook that assumes expenses for new Alzheimer’s treatment will outpace its sales.

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Despite beating fourth-quarter expectations, Biogen shares toppled 3.5% to close at 278.98 on today’s stock market. That kept Biogen stock below a buy point at 296 out of a cup-with-handle base, according to MarketSmith.com. Shares have a strong IBD Digital Relative Strength Rating of 91, putting them in the leading 9% of all stocks when it comes to 12-month performance.

For the year, Biogen expects “modest in-market revenue” for Alzheimer’s treatment Leqembi. The company predicts Leqembi commercialization expenses will exceed revenue this year. Further, Leqembi gained an accelerated approval in the U.S., meaning it likely will face insurance restrictions.

There is a limited number of specialists who can diagnose Alzheimer’s disease. Leqembi also requires scans to confirm the presence of plaque in the brain and must be given via intravenous infusions, according to a slide from Biogen’s presentation.

“We believe company expectations around the Leqembi launch are appropriately measured, and are aligned with our about $1.3 billion U.S. revenue estimate in 2026,” Needham analyst Ami Fadia said in a note to clients. She has a buy rating and 325 price target on Biogen stock.

Biogen Stock: Sales Fall But Top Forecasts

Overall fourth-quarter metrics beat Wall Street’s expectations for Biogen stock. Biogen’s sales fell 7% to $2.54 billion but came in above calls for $2.44 billion, according to FactSet. Adjusted profit climbed 19% and hit $4.05 per share. Analysts projected per-share profit of $3.48.

The lion’s share of the sales beat came from spinal muscular atrophy treatment Spinraza. Revenue from Spinraza rose 4% to $458.8 million. The Street projected $395 million to $426 million in sales, Wedbush analyst Laura Chico said in a report.

But sales of multiple sclerosis medicine Tecfidera came in mixed — beating some analysts’ expectations and missing others. Sales tumbled 39% to $297.1 million amid generic competition. Another MS drug, Tysabri, missed at $488.4 million, down 5%. Tysabri faces pricing pressure, Biogen said.

Chico kept her neutral rating and 249 price target on Biogen stock.

Guidance Comes In Mixed

For the year, Biogen expects sales to decline by a mid-single-digit percentage and for adjusted profit to come in at $15-$16 per share.

The guidance assumes Biogen will win a patent decision for Tecfidera in Europe. Further, Eisai (ESALY) will no longer reimburse Biogen for expenses related to its older Alzheimer’s drug, Aduhelm. That will be a roughly $100 million headwind in 2023, Chico said.

Biogen’s profit outlook missed expectations for $15.80 at the midpoint, according to FactSet. The sales guidance is above forecasts, though, Mizuho Securities analyst Salim Syed said in a note.

At a decline of 4%-6%, sales would come in at $9.56 billion to $9.77 billion. Analysts polled by FactSet predicted $9.37 billion in sales, a steeper drop-off of about 8%.

Now, Biogen stock analysts are watching the company’s efforts to realign its pipeline. Key points to watch include Leqembi and a depression treatment with Sage Therapeutics (SAGE) called zuranolone.

The focus appears to be on “optimizing Leqembi and zuranolone launches, right-sizing commercial investment given declining MS revenue, and reconfiguring the pipeline to diversify and reduce risk,” RBC Capital Markets analyst Brian Abrahams said in a report. “All of which we believe should be well-received in theory, though Biogen will need to execute on these initiatives.”

Abrahams has an outperform rating on Biogen shares and a 359 price target.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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