From a leading German business and financial newspaper:
Biogen Bet on Alzheimer's Medications Since June 2023, Biogen's stock has lost 56% of its value. The trigger for the price drop was the news that the European Union's decision on the approval of the first Alzheimer's therapy would be delayed.Biogen, in collaboration with the Japanese company Eisai, developed the drug Lecanemab, which is intended for the treatment of mild memory and cognitive impairments in the early stages of Alzheimer's disease.Lecanemab is important for Biogen. So far, the company based in Cambridge has primarily relied on revenue from multiple sclerosis medications. Last year, drugs for the autoimmune disease accounted for 60% of product revenue.However, sales in this area have decreased: in 2019, revenue was still $8.5 billion, but by 2024 it had dropped to just $4.4 billion. As a result, overall product revenue also fell from $11.4 billion to $7.2 billion.Lecanemab is expected to stop this decline and get Biogen back on the growth path. The drug has already been approved in the USA, Japan, China, and the UK. However, it is selling less well than expected. In 2024, Biogen generated only $60 million in revenue from Alzheimer’s medications.It could take some time before it becomes more widespread, as the therapy requires regular brain scans and additional tests. This means that Biogen might not return to growth until 2026. The chances for that are high—but so are the risks: Other companies, such as Eli Lilly, are also working on Alzheimer's drugs.However, Biogen is operating profitably and is sufficiently capitalized to survive this phase. The debt ratio, calculated as the ratio between equity and net debt, stands at a low 30%.Anyone speculating on a turnaround of this stock and buying now is doing so at a bargain price: The price-to-earnings ratio based on expected earnings for 2025 is only nine. This makes the stock unusually undervalued for the pharmaceutical industry.
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