The Biotech Graveyard Has A Survivor

I spent last weekend with an old friend from my Goldman days, and watching him care for his mother, who’s deep into Alzheimer’s, reminded me why I’ve been tracking Biogen (BIIB) so closely. The disease is brutal, and for the longest time, the investment thesis around Alzheimer’s therapeutics felt more like charity than capitalism.

But something’s shifting at Biogen, and it’s not just the Wall Street cheerleaders getting excited about another biotech pump job.

The stock has been showing signs of life since I last wrote about it, and while Mr. Market loves a good narrative, the numbers underneath are actually starting to tell a real story. Biogen just posted second-quarter revenue of $2.65 billion, beating consensus by $322 million.

More importantly, their non-GAAP earnings hit $5.47 per share when most investors were modeling something far more pedestrian.

Meanwhile, their EBIT margin reached 34.6% in Q2, continuing a four-quarter expansion that suggests management finally figured out how to run a profitable drug company instead of burning cash on hopeful press releases.

On top of these, Vumerity, their multiple sclerosis drug, pulled in $212.3 million in Q2, up 28% year-over-year. That matters because Tecfidera, their older MS franchise, is getting hammered by generics from Viatris (VTRS), Amneal (AMRX), and Sandoz (SDZNY).

Most pharma companies watching their blockbuster erode would be panicking, but Biogen’s actually managing a graceful transition. The Vumerity uptake tells me that neurologists trust the company’s reformulations and are willing to switch patients to a newer delivery mechanism.

That’s brand equity you can’t fake, and it’s worth more than any marketing budget.

The Leqembi story is where things get genuinely interesting, though I remain cautiously optimistic rather than buying into the hype machine. Global sales hit $160 million in Q2, up 67% quarter-over-quarter.

Before you mortgage the house, understand what that really means. We’re still in the early innings of commercialization, and the Alzheimer’s market is notoriously difficult to crack.

My friend’s mother couldn’t get Leqembi because her neurologist said the infusion requirements and monitoring protocols are too intensive for someone already compromised. That’s the reality facing thousands of potential patients.

But all is not lost. Biogen and Eisai (ESAIY) just launched Leqembi Iqlik, a subcutaneous version, along with a companion program designed to navigate the nightmare that is insurance reimbursement for specialty drugs. This is huge.

The original formulation required bi-weekly infusions at specialized centers. The new version can be administered at home or in less intensive clinical settings.

I’ve spoken with three different neurology practice managers in the past month, and all of them mentioned access as the primary barrier to prescribing, not efficacy concerns. If the subcutaneous version removes that friction, we could see meaningful acceleration in Q3 and Q4.

The European launch adds another dimension.

Austria and Germany came online in late August and early September, respectively, and while European pricing typically runs below US levels, the patient population is substantial and the regulatory approval validates the science in a way that matters to American physicians who’ve been sitting on the fence.

What worries me is Eli Lilly’s (LLY) Kisunla, which just received European approval in late September. Competition in Alzheimer’s has historically meant everyone loses because the market develops so slowly.

But this time might be different – two credible therapies could actually legitimize the category and expand the treatment universe rather than cannibalizing each other. I’m watching that dynamic closely.

The company’s raising 2025 guidance from $14.50-$15.50 to $15.50-$16.00 per share tells me management has visibility into the back half that goes beyond wishful thinking. They’re not known for sandbagging, but they’re also not prone to promotional guidance hikes unless orders are already in the system.

Zurzuvae, their postpartum depression treatment, is another quiet winner. Sales hit $46.4 million in Q2, up 211% year-over-year.

The decision to focus exclusively on postpartum depression rather than broader major depressive disorder initially looked like defeat, but it’s proving to be smart portfolio management. The addressable market is smaller, but the clinical profile is cleaner and the reimbursement path is more straightforward.

I’m moving Biogen from my “ignore” folder to my active watchlist, which is about as strong an endorsement as I give companies that have disappointed for this long.

Support sits around $150 with technical upside to $205 if the fundamentals continue improving. This isn’t the trade for aggressive portfolio positioning, but it’s become interesting enough that ignoring it would be lazy analysis.

The brutal reality is that my friend’s mother is beyond help from any of these therapies, but the commercial infrastructure Biogen is building now could actually serve the millions of families facing this disease in the coming decades. And maybe, finally, shareholders get rewarded for financing all those expensive dead ends.