Maintaining Our $340 Biogen FVE as new CEO Positioned to Rework Pipeline

We're maintaining our $340 fair value estimate for Biogen following in-line performance in the fourth quarter of 2022 and guidance for 2023 that was slightly ahead of our expectations. Fourth-quarter and full-year revenue slipped 7%, and full-year non-GAAP EPS was down 8%, as MS revenue fell 11% in 2022 due to a combination of Tecfidera generics and continued declines of interferon drugs Avonex and Plegridy. With the MS portfolio in decline, the two biggest potential growth drivers over the next few years remain Alzheimer's drug Leqembi and depression drug zuranolone. Leqembi received accelerated approval in the U.S. in January, and we continue to expect the launch to begin to take off more strongly late this year, following potential full approval (based on the phase 3 study) and Medicare reimbursement, with $5 billion in peak sales split between Biogen and Eisai. We've also raised our assumed probability of approval for zuranolone, given the drug's recent filing with the FDA and expected approval in August, and we assume peak sales approaching $1 billion. We see shares of Biogen as undervalued, as Leqembi's potential should allow positive revenue growth in 2024 and beyond. We think Biogen's pipeline is underappreciated by investors and helps support a wide economic moat.