Slow Market Penetration For Biogen's Another Alzheimer's Drug: UBS Highlights Risks, Forecasts

UBS has downgraded Biogen Inc BIIB, noting inflection for its second Alzheimer’s drug Leqembi (lecanemab) will take longer than anticipated.

Despite anticipating Leqembi’s continued dominance in the Mild Cognitive Impairment (MCI)/Mild Alzheimer’s market, recent reviews of IQVIA/Symphony data and management commentary by UBS analysts suggest that a substantial increase in sales is not expected in 2024. 

This is primarily due to challenges related to neurologist access and uptake, which Biogen may find difficult to address. 

Analysts downgrade from Buy to Neutral, with a price target of $276, down from the prior target of $311.

Consequently, the projected launch trajectory has been significantly revised, with 2024/25 estimated worldwide end-user sales now standing at $135/$935 million, as opposed to the previous estimates of $512/$1,640 million. 

Also Read: Evolving Landscape For Alzheimer’s Blood Tests Gains Momentum Amid Inaccuracy Concerns.

There is also a perceived, albeit low, risk associated with the Leqembi subcutaneous filing, potentially leading to further downward pressure on estimates if the FDA demands additional data at a lower dose.

UBS analysts note that Biogen is undergoing a turnaround under its new CEO, Chris Viehbacher. 

The company’s strategy involves introducing growth drivers like Leqembi and Skyclarys and a thorough cost-cutting initiative until 2025. 

Despite the approval of the strategy, the company is presently focused on execution and faces a shortage of significant pipeline catalysts.

The analyst is bullish on Reata Pharmaceuticals Inc.’s $7.3 billion deal and sees Skyclarys (Friedreich’s ataxia drug) as an important and viable near-term growth driver.

The analyst appreciates CEO Viehbacher’s strategy and implementation but anticipates that the benefits may not be reflected in the stock performance in 2024. 

As a result, UBS expects investors to gravitate towards stocks with higher growth potential and value-inflecting outcomes. On the other hand, UBS perceives minimal downside risk for Biogen at its current valuation, yet it recommends prioritizing Buy-rated stocks like Regeneron Pharmaceuticals Inc REGN and Vertex Pharmaceuticals Incorporated VRTX.

Price Action: BIIB shares are down 1.10% at $248.75 on the last check Wednesday.