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Biogen Inc BIIB

Morningstar Rating
$239.12 +5.25 (2.24%)
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Company Report

Biogen Earnings: Slightly Lowering Our FVE, but Leqembi and Pipeline Undervalued

We have slightly lowered our Biogen fair value estimate from $327 to $303 following third-quarter results that were relatively in line with our estimates but reflected continued slow uptake of Leqembi in the U.S. market despite full U.S. Food and Drug Administration approval (and Medicare coverage) in early July. Overall, we think the cost of Leqembi’s rollout could be higher than we had anticipated, and we’ve also lowered our assumed 2023 Leqembi sales (booked by partner Eisai) to below $50 million. That said, we think progress with blood-based tests and subcutaneous delivery of Leqembi could begin to benefit patients as early as 2025, driving increased market penetration and eventual annual Leqembi sales of more than $7 billion. Management slightly boosted top-line expectations for 2023 from a mid-single-digit decline to a low-single-digit decline, but this was mostly a result of a change in accounting for Leqembi, with collaboration costs now flowing through operating expense lines instead of revenue. Non-GAAP EPS guidance was lowered to account for the Reata acquisition, or essentially narrowed from original guidance excluding the impact of this deal. Overall, we remain enthusiastic about long-term potential for Leqembi and Biogen’s pipeline, although we expect continued sales declines in 2024. Data from several programs in ALS, Angelman’s, lupus, and essential tremor should be available by mid-2024, and positive data could create upside to our valuation. We think Biogen’s neurology and rare disease portfolio still supports a wide moat.

Price vs Fair Value

BIIB is trading at a 21% discount.
Price
$239.13
Fair Value
$111.00
Uncertainty
High
1-Star Price
$995.77
5-Star Price
$366.20
Economic Moat
Nrwfs
Capital Allocation
Dfkryvl

Bulls Say, Bears Say

Bulls

Biogen leads the $20 billion global MS market with Avonex, Plegridy, Tysabri, and Tecfidera. The launch of Vumerity partly protects Tecfidera sales from generic headwinds in the U.S.

Bears

Injectable MS therapies like Avonex have lost their edge, as branded oral competitors and generic injectables have launched and Tysabri looks vulnerable to biosimilars by 2024.

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News

Trading Information

Previous Close Price
$233.87
Day Range
$235.74239.93
52-Week Range
$220.86319.76
Bid/Ask
$235.08 / $241.78
Market Cap
$34.65 Bil
Volume/Avg
1.2 Mil / 981,579

Key Statistics

Price/Earnings (Normalized)
15.11
Price/Sales
3.48
Dividend Yield
Dividend Yield (Forward)
Total Yield

Company Profile

Biogen and Idec merged in 2003, combining forces to market Biogen's multiple sclerosis drug Avonex and Idec's cancer drug Rituxan. Today, Rituxan and next-generation antibody Gazyva are marketed via a collaboration with Roche. Biogen also markets novel multiple sclerosis drugs Plegridy, Tysabri, Tecfidera, and Vumerity. In Japan, Biogen's MS portfolio is copromoted by Eisai. Hemophilia therapies Eloctate and Alprolix (partnered with Sobi) were spun off as part of Bioverativ in 2017. Biogen's newer products include Spinraza (SMA, with partner Ionis), Leqembi (Alzheimers, with partner Eisai), Skyclarys (Friedreich's Ataxia, Reata), Zurzuvae (post-partum depression, Sage), and Qalsody (ALS, Ionis). Biogen has several drug candidates in phase 3 trials in neurology-related fields.
Sector
Healthcare
Industry
Drug Manufacturers - General
Stock Style Box
Mid Value
Total Number of Employees
8,725

Competitors

Valuation

Metric
BIIB
RHHBY
NVS
Price/Earnings (Normalized)
15.1113.6614.13
Price/Book Value
2.397.715.17
Price/Sales
3.483.494.23
Price/Cash Flow
14.8211.7713.35
Price/Earnings
BIIB
RHHBY
NVS

Financial Strength

Metric
BIIB
RHHBY
NVS
Quick Ratio
0.900.720.41
Current Ratio
1.681.180.94
Interest Coverage
6.6817.4211.35
Quick Ratio
BIIB
RHHBY
NVS

Profitability

Metric
BIIB
RHHBY
NVS
Return on Assets (Normalized)
9.03%17.37%11.87%
Return on Equity (Normalized)
16.69%56.49%25.88%
Return on Invested Capital (Normalized)
10.84%27.41%17.42%
Return on Assets
BIIB
RHHBY
NVS

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