Biogen BIIB stock has declined 21.4% in the past three months against a decrease of 12.3% for the industry. The stock has also underperformed the sector and the S&P 500 index, as seen in the chart below.

BIIB Stock Underperforms Industry, Sector & S&P 500

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The stock’s performance has been below most large drugmakers’ performance. Biogen's revenues declined 3% in the first nine months of 2024. Sales of Biogen’s key multiple sclerosis (“MS”) drugs like Tecfidera and Tysabri and spinal muscular atrophy (SMA) treatment, Spinraza are declining due to competitive pressure. Biogen has also regularly faced pipeline setbacks over the years, including the failure of its first Alzheimer’s drug, Aduhelm. It has a high-risk pipeline.

However, not everything is going wrong for Biogen. With competition in the MS market intensifying, Biogen has successfully diversified its pipeline across areas like Alzheimer's, immunology and rare diseases. Biogen has also strengthened its mid-to-late-stage pipeline with M&A deals. Some new drugs have the potential to drive Biogen’s long-term growth. 

Let us discuss these factors in detail to understand how to play Biogen’s stock.

Key Multiple Sclerosis Drugs, Spinraza Face Increased Competition

Sales of MS drugs and Spinraza are declining due to competitive pressure. Tecfidera revenues are declining as multiple generic versions have been launched in North America, Brazil and certain European countries. Regulatory applications seeking approval for a biosimilar referencing Tysabri have been approved in the United States and Europe. A Tysabri biosimilar is now available in some European countries, which has begun to hurt growth. Additional launches in the United States and other countries are expected in the near term. Spinraza sales declined almost 13.3% in the first nine months of 2024 due to increased competitive pressure and a decrease in demand. Sales of MS drugs and Spinraza are not expected to show any significant improvement in 2025.

BIIB’s New Drug Contributing to Top-Line Growth: Is it Enough?

Amid declining demand for MS drugs and Spinraza, Biogen believes its new products, Leqembi for Alzheimer’s disease, Skyclarys for Friedreich’s ataxia and Zurzuvae for depression, have the potential to revive growth.

Biogen and partner Eisai’s Leqembi/lecanemab gained full approval from the FDA for early Alzheimer’s disease in the United States in July 2023. Though the Leqembi launch was slow, sales have picked up in 2024 showing sequential improvement. However, Leqembi sales in the United States are still below expectations of Eisai/Biogen.

Biogen and Eisai believe that Leqembi has the potential to generate blockbuster sales as there remains a massive unmet need for Alzheimer's disease. Regulatory applications seeking approval of Leqembi are under review in Europe. In November, the Committee for Medicinal Products for Human Use (“CHMP”) of the European Medicines Agency gave a positive opinion regarding the marketing approval of Leqembi in the European Union. The CHMP had earlier given a negative opinion regarding the marketing approval for Leqembi for early Alzheimer's disease in July 2024. Leqembi has been launched in China and Japan and the uptake in these markets is encouraging.

A regulatory filing seeking approval for a maintenance intravenous dosing version of Leqembi is under review in the United States. An application for the subcutaneous autoinjector was filed in October.

Biogen and partner Sage Therapeutics’ SAGE Zurzuvae (zuranolone) was approved by the FDA to treat women with postpartum depression (PPD) in August 2023. The acquisition of Reata Pharmaceuticals in September 2023 added its newly approved rare disease drug, Skyclarys, for the treatment of Friedreich’s ataxia to Biogen’s portfolio. Skyclarys is seeing strong launch trends in the United States as well as the EU and is expected to be approved in 20 countries by the end of 2024 (approved in 15 countries outside the United States now). The Zurzuvae launch also exceeded the company’s internal expectations.

However, the new drugs are not yet generating enough sales to make up for the declining revenues of MS drugs and Spinraza. Some ex-US reimbursement/pricing dynamics hurt Skyclarys sales in the third quarter. It remains to be seen if the negative impact continues in the fourth quarter.

BIIB’s Valuation & Estimates

BIIB’s stock is trading at an attractive valuation relative to the industry. It is also trading below its 5-year mean. Going by the price/earnings ratio, the company shares currently trade at 9.27 on a forward 12-month basis, lower than 17.05 for the industry. The stock is also trading below its 5-year mean of 13.55.

BIIB Stock Valuation

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for earnings has risen from $16.04 to $16.45 per share for 2024, while for 2025, the number has declined from $17.21 to $16.91 per share over the past 60 days.

BIIB’s Estimate Movement Mixed

Image Source: Zacks Investment Research

Stay Invested in BIIB Stock

Other than competitive pressure on MS drugs and Spinraza, Biogen’s other troubles include the FDA approval of Eli Lilly’s LLY Alzheimer’s drug Kisunla (donanemab) in July 2024, which will pose significant competition to Leqembi. Biogen faced several pipeline setbacks in 2024. In November, the company discontinued further development of Zurzuvae in major depressive disorder indication, which represents a much larger market opportunity than the current approved PPD indication.

Biogen is definitely not the best large-cap drugmaker to have in one’s portfolio. However, Biogen’s reasonable valuation, an improving pipeline and better sales prospects of new drugs are good enough reasons for those who own this Zacks Rank #3 (Hold) stock to stay invested for now and not sell their shares immediately. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Though there is still uncertainty about Biogen’s sales and profits improving significantly, investors can hold the stock given the potential of its new drugs.

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