Biogen (BIIB): Felzartamab, Stoke, and Growth Beyond MS

Biogen's Growth Strategy: Felzartamab, Stoke Therapeutics, and the Future Beyond Multiple Sclerosis#

Despite a modest +0.08% dip to $143.43, BIIB is far from stagnant. The company's strategic initiatives, including a Phase 3 trial for Felzartamab in kidney transplant rejection and a collaboration with Stoke Therapeutics for Dravet syndrome, signal a determined pivot towards new growth avenues amidst challenges in its core multiple sclerosis (MS) drug portfolio.

The decline in MS drug sales has put pressure on Biogen's financial performance, but the company is actively pursuing new growth strategies through pipeline diversification and strategic collaborations. Key developments include the Phase 3 trial of Felzartamab for kidney transplant rejection, regulatory hurdles for Leqembi in Europe, and a partnership with Stoke Therapeutics for Dravet syndrome treatment. Biogen's valuation suggests it may be a value stock, but future success depends on its ability to innovate and execute its growth initiatives.

Biogen's Fight Against Declining MS Drug Sales#

The Impact of Generic Competition on Tecfidera#

BIIB is currently navigating a challenging period marked by declining sales in its key multiple sclerosis (MS) drug portfolio. This decline is primarily attributed to increasing competitive pressures from generic versions of Tecfidera and biosimilar threats to other established drugs like Tysabri and Spinraza. According to recent reports, BIIB's total revenues decreased by -1.62% in 2024, reflecting the impact of these competitive dynamics. The company is actively seeking new growth drivers to offset these losses and revitalize its financial performance.

The pressure on BIIB's MS franchise necessitates a strategic shift towards pipeline diversification and new therapeutic areas. The company's future success hinges on its ability to successfully launch and commercialize new drugs, such as Felzartamab and Leqembi, while also managing costs and improving operational efficiency. BIIB's management is focused on executing its growth strategy, which includes strategic collaborations, pipeline advancements, and a commitment to innovation.

Tysabri and Spinraza Face Increasing Biosimilar Threats#

Tysabri and Spinraza, two of BIIB's key revenue-generating MS drugs, are facing increasing threats from biosimilar competition. Tysabri is already encountering biosimilar competition in Europe, and further launches are expected in the U.S. in 2025. This increased competition is likely to erode Tysabri's market share and revenue contribution. Similarly, Spinraza sales declined almost 10% in 2024 due to heightened competitive pressure in the spinal muscular atrophy (SMA) treatment market.

The entry of biosimilars poses a significant challenge to BIIB's established product portfolio. Biosimilars offer lower-cost alternatives to branded drugs, which can lead to price erosion and market share losses for the original manufacturer. BIIB is implementing strategies to mitigate the impact of biosimilar competition, including developing and launching its own biosimilars and focusing on innovative therapies with strong patent protection.

Felzartamab: Can It Revitalize Biogen's Growth?#

Felzartamab's Potential in Kidney Transplant Rejection#

Felzartamab, an investigational drug being developed by BIIB, represents a potential growth driver for the company beyond its traditional focus on MS. Felzartamab is currently being evaluated in a Phase 3 clinical trial for the treatment of late antibody-mediated rejection (AMR) in kidney transplant recipients. The initiation of this trial, known as TRANSCEND, marks a significant milestone in BIIB's efforts to diversify its pipeline and expand into new therapeutic areas. According to a press release on globenewswire.com, the Phase 3 study was initiated on March 11, 2025 globenewswire.com.

The TRANSCEND trial is designed to enroll approximately 120 adult kidney transplant recipients diagnosed with late AMR. The study will assess the efficacy and safety of felzartamab compared to placebo. Positive results from this trial could pave the way for regulatory approval and commercialization of felzartamab, providing BIIB with a new revenue stream and a foothold in the kidney disease market. The initiation of the Phase 3 trial also triggered a $35 million milestone payment to MorphoSys, reflecting the progress in the drug's development.

TRANSCEND Trial Design and Patient Enrollment#

The TRANSCEND trial is a global clinical study designed to evaluate the efficacy and safety of felzartamab in adult kidney transplant recipients diagnosed with late AMR. The study will enroll approximately 120 patients who will be randomized to receive either felzartamab or placebo. The primary endpoint of the trial is the change in kidney function as measured by estimated glomerular filtration rate (eGFR).

Patient enrollment in the TRANSCEND trial is underway, and BIIB expects to complete enrollment in the coming months. The company anticipates reporting top-line results from the trial in the second half of 2027. If the results are positive, BIIB plans to submit a marketing application to regulatory authorities, seeking approval to market felzartamab for the treatment of late AMR in kidney transplant recipients.

Phase 3 Felzartamab Trial: What Investors Need to Know#

The Phase 3 trial of felzartamab is a critical event for BIIB, and investors should closely monitor its progress and results. Positive results from the trial could significantly boost BIIB's stock price and improve its long-term growth prospects. Conversely, negative results could negatively impact the stock and raise concerns about the company's pipeline diversification efforts.

Investors should pay attention to key milestones in the felzartamab program, including patient enrollment, data readouts, and regulatory submissions. The expected top-line data from the EMPEROR trial in the second half of 2027 will be a major catalyst for BIIB's stock. Additionally, the planned initiation of Phase 3 trials of felzartamab in IgA nephropathy and primary membranous nephropathy in 2025 will provide further insights into the drug's potential.

Leqembi's Uncertain Future in Europe#

EU Regulatory Concerns and Leqembi's Approval Timeline#

Leqembi, BIIB's Alzheimer's drug developed in collaboration with Eisai, faces an uncertain future in Europe due to regulatory concerns. While the Committee for Medicinal Products for Human Use (CHMP) initially gave a positive opinion for Leqembi's approval in the EU in November 2024, the European Commission requested a reassessment based on new safety information. A final decision is expected by August 31, 2025. Reuters reported on February 28, 2025, that the EU regulator was not updating its opinion on Eisai and Biogen's Alzheimer's drug.

The regulatory uncertainty surrounding Leqembi in Europe could have a significant impact on BIIB's financial performance. If Leqembi is not approved in the EU, BIIB would miss out on a potentially lucrative market for its Alzheimer's drug. This could negatively affect the company's revenue projections and stock price. However, Leqembi has already gained approval in the U.S., China, and Japan, which could help offset some of the potential losses from a negative outcome in Europe.

Biogen's Collaboration with Stoke Therapeutics: A Strategic Move?#

Zorevunersen's Potential in Treating Dravet Syndrome#

BIIB's collaboration with Stoke Therapeutics represents a strategic move to expand into new therapeutic areas and diversify its pipeline. The collaboration focuses on the development and commercialization of zorevunersen, a potential first-in-class disease-modifying medicine in development for the treatment of Dravet syndrome, a rare genetic epilepsy associated with refractory seizures and neurodevelopmental impairments. MarketWatch noted the partnership on February 18, 2025 MarketWatch.

Under the terms of the agreement, BIIB will commercialize zorevunersen in all territories outside the United States, Canada, and Mexico. Stoke Therapeutics will receive a $165 million upfront payment and is eligible to receive up to $385 million in milestone payments, as well as tiered royalties on BIIB's net sales. The collaboration allows BIIB to leverage Stoke Therapeutics' expertise in RNA-based therapies and expand its presence in the neurology market.

The Financial Implications of the Stoke Partnership for Biogen#

Financial Terms of the Stoke Therapeutics Agreement#

The collaboration with Stoke Therapeutics has several financial implications for BIIB. The $165 million upfront payment will negatively impact BIIB's cash flow in the short term. However, the shared development costs and potential revenue stream from zorevunersen could provide long-term financial benefits.

BIIB will cover 30% of zorevunersen's clinical development costs, while Stoke covers 70%. This cost-sharing arrangement reduces BIIB's financial risk. If zorevunersen is successfully commercialized, BIIB will generate revenue from sales outside of North America and pay tiered royalties to Stoke Therapeutics. The milestone payments and royalty expenses will impact BIIB's earnings if the drug is successful.

Is Biogen a Value Stock in the Pharma Sector?#

Biogen's P/E Ratio Compared to Industry Peers#

BIIB's valuation metrics suggest that it may be considered a value stock in the pharmaceutical sector. As of March 17, 2025, BIIB's P/E ratio (TTM) is 12.83, while its forward P/E ratio is 8.59 for 2025. These ratios are lower than the average P/E ratio for companies in the 'Drug Manufacturers - General' industry, which is around 20.1. MarketBeat suggested on March 6, 2025, that Biogen stock is mutating into a value play MarketBeat.

A lower P/E ratio may indicate that the market has lower expectations for BIIB's future earnings growth. However, it also suggests that the stock may be undervalued and has the potential for appreciation if BIIB can successfully execute its growth strategy. Investors should consider BIIB's valuation metrics in conjunction with its growth prospects, pipeline developments, and competitive landscape to determine whether it is a worthwhile investment.

Biogen Valuation Compared to Industry Peers#

The following table compares key valuation metrics for BIIB with the average for the Drug Manufacturers - General industry.

BIIB's lower valuation metrics suggest that it may be undervalued compared to its peers. However, investors should also consider the company's growth prospects and risks before making an investment decision.

The Evolving Landscape of the Drug Manufacturing Industry#

The Role of Innovation in Drug Manufacturing#

The drug manufacturing industry is constantly evolving, driven by technological advancements, regulatory changes, and increasing competition. Innovation plays a critical role in the success of drug manufacturers, as companies must continuously develop new and improved therapies to meet the evolving needs of patients.

BIIB is committed to innovation and invests heavily in research and development. The company's pipeline includes several promising drug candidates in various stages of development, targeting a range of diseases. BIIB's ability to successfully innovate and bring new drugs to market will be crucial for its long-term growth and success. BIIB's Research and Development expenses account for 20.06% of its revenue.

Biogen's Path Forward: Challenges and Opportunities#

Biogen's Strategies for Long-Term Growth#

BIIB faces both challenges and opportunities as it navigates the evolving pharmaceutical landscape. The declining sales of its key MS drugs pose a significant challenge, requiring the company to find new growth drivers and diversify its revenue streams. Regulatory uncertainties, particularly for Leqembi in Europe, also present a hurdle for BIIB.

However, BIIB also has several opportunities to drive future growth. The company's pipeline includes promising drug candidates like Felzartamab and Zorevunersen, which could generate significant revenue if successfully commercialized. Strategic collaborations, such as the partnership with Stoke Therapeutics, can expand BIIB's therapeutic areas and leverage external expertise. Additionally, BIIB's commitment to innovation and cost management positions it for long-term success.

Key Takeaways for Investors:#

• Pipeline Diversification: BIIB is actively diversifying its pipeline to reduce reliance on MS drugs. The success of Felzartamab and Zorevunersen is critical for future growth.
• Regulatory Hurdles: The regulatory outcome for Leqembi in Europe remains uncertain and could impact BIIB's revenue projections.
• Strategic Collaborations: Partnerships like the one with Stoke Therapeutics are essential for expanding BIIB's therapeutic areas and leveraging external expertise.
• Valuation: BIIB's valuation metrics suggest it may be a value stock, but future success depends on executing its growth strategy.
• Financial Performance: While revenue growth is projected at +0.48% CAGR, the company's net income growth stands at +40.57%, indicating improved efficiency and profitability.

Financial Health Metrics:#

These metrics indicate a stable financial position for BIIB, allowing for continued investment in R&D and strategic initiatives.