Q4 2024 Earnings Summary
- LEQEMBI's strong sales growth: LEQEMBI's fourth quarter end market revenue was $87 million globally, up 30% sequentially from the third quarter of 2024, with U.S. sales of $50 million, up 28% sequentially, indicating significant growth momentum in the Alzheimer's treatment market.
- Confidence in Biogen's robust pipeline: Biogen's CEO expresses increased confidence in the company's pipeline, highlighting assets like dapirolizumab, which has completed a positive Phase III study in systemic lupus erythematosus, and litifilimab, advancing in development, positioning Biogen well for future growth.
- Strong financial position enabling growth opportunities: Biogen ended 2024 with $2.4 billion of cash on hand and generated $2.7 billion in free cash flow, resulting in a low leverage ratio of approximately 1.5x net debt to EBITDA, providing significant capacity to invest in acquisitions or growth initiatives that make good financial sense.
- LEQEMBI's revenue growth may be slower than anticipated due to capacity constraints, delays in new formulation approvals, and challenges with acceptance and reimbursement of diagnostics. The subcutaneous form for maintenance is not expected until late 2025, which may limit acceleration in growth. Additionally, ex-U.S. markets may have already captured the low-hanging fruits, potentially limiting further growth in those regions.
- Biogen faces significant revenue headwinds from declining multiple sclerosis (MS) revenues, with approximately $4.5 billion in MS revenue expected to decline over the next 5 to 10 years. The company's ability to return to sustainable revenue growth depends heavily on the success of its pipeline and potential acquisitions, which carry significant risks and uncertainties.
- SPINRAZA is facing increased competition in a limited market, with gene therapies and oral therapies competing for a relatively small patient population. This competitive pressure may hinder Biogen's ability to maintain or grow revenue from SPINRAZA.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Full-Year 2024 Non-GAAP Diluted EPS | FY 2024 | $16.10 to $16.60 | no current guidance | no current guidance |
Total Revenue | FY 2024 | Expected to decline by a low single‐digit percentage for the full year | no current guidance | no current guidance |
Cost Savings from the Fit for Growth Initiative | FY 2024 | $1 billion of gross savings and $800 million of net savings by the end of 2025, with half of the net savings expected by end‐2024 and the other half in 2025 | no current guidance | no current guidance |
Seasonal SG&A Spending | FY 2024 | Expected to be higher in Q4 2024 compared to the rest of the year | no current guidance | no current guidance |
Non-GAAP Diluted EPS | FY 2025 | no prior guidance | $15.25 to $16.25, including a $0.35 EPS headwind from foreign exchange | no prior guidance |
Total Revenue | FY 2025 | no prior guidance | Expected to decline by a mid‐single‐digit percentage, including roughly a 1% headwind from foreign exchange | no prior guidance |
Impact from Medicare Part D Redesign | FY 2025 | no prior guidance | Approximately $50 million to $100 million impact at the total company level | no prior guidance |
Combined Non-GAAP R&D and SG&A Expense | FY 2025 | no prior guidance | Approximately $3.9 billion | no prior guidance |
Non-GAAP Operating Margin Percentage | FY 2025 | no prior guidance | Expected to remain relatively flat compared to 2024 | no prior guidance |
Non-GAAP Other Income and Expense | FY 2025 | no prior guidance | Expected to be a net expense of approximately $180 million to $220 million | no prior guidance |
Seasonality and Channel Dynamics | FY 2025 | no prior guidance | First quarter expected to be pressured due to seasonality, driven by higher discounts and allowances, particularly impacting the MS business | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Seasonal SG&A | Q4 2024 | Expected to be higher in Q4 2024 compared to the rest of the year | 680.0 million | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
LEQEMBI’s Growth Trajectory and Commercialization Challenges | Saw strong U.S. uptake with expanding prescriber base and IDN approvals (Q1: 2.5x growth, Q2: continued momentum, ~40% commercial starts) | Sales up ~30% sequentially, ongoing capacity constraints, subcutaneous option targeted for late 2025 | Consistent focus; sentiment remains optimistic, with efforts shifting to address capacity and formulation hurdles. Could significantly impact future revenue. |
Biogen’s Pipeline Assets (dapirolizumab, litifilimab) | Highlighted as high-conviction projects in lupus; Phase III programs advanced (Q1, Q2) | Positive dapirolizumab data, second Phase III in SLE launched; litifilimab in SLE and CLE | Recurring topic; now more bullish with multiple Phase III trials. Strong potential in immunology. |
Declining MS Revenues and Increased Competitive Pressures | 4–5% decline observed; generics/biosimilars eroding market share (Q1, Q2) | ~8–9% decline; anticipated further erosion in 2025 from new biosimilars/generics | Unchanged downward trend; pressure expected to increase. Continues to weigh on overall performance. |
Financial Position and Capacity for Acquisitions | Maintained strong cash flow, discussed Reata acquisition capacity; ~1.5–2x leverage (Q1, Q2) | $2.4B in cash on hand, ~2 turns gross / 1.5 turns net leverage, willing to pursue smaller or larger M&A | Consistent liquidity; still disciplined in M&A. Financial strength positions them for further external growth. |
SPINRAZA Competition | Faced gene and oral therapies; ex-U.S. declines from shipment timing and competition (Q1, Q2) | Competitive market with limited patient pool; developing high-dose option and new intrathecal device | Recurring challenge; focused on efficacy and patient-friendly administration. Outcome could preserve/share market. |
Acquisition of HI-Bio and Capital Strategy Transformation | Not mentioned in Q1 [—]; highlighted in Q2 as a move into immunology | Cited as transformative for pipeline; underscores preference for deals with strong data | Newer topic (Q2, Q4); now key in immunology expansion. Reflects active capital deployment approach. |
Cost Reduction Initiatives and Impact on Margins | Fit for Growth on track for ~$1B gross savings by 2025; improved operating margins (Q1, Q2) | Cost savings continue; ~flat margin outlook for 2025 but freeing resources for pipeline | Ongoing; steady margin gains but reinvestment in new launches. Critical to fund growth. |
Regulatory and Market Hurdles for LEQEMBI | Q1: rolling submissions, additional immunogenicity data needed | Delays to subcutaneous approval (PDUFA Aug 2025); capacity and reimbursement hurdles | Consistent; subcu delays push near-term opportunity. Reimbursement/diagnostics remain key obstacles. |
Concerns Around the Amyloid Hypothesis and LEQEMBI’s Risk-Benefit Profile | Not specifically mentioned in Q1 [—] | Addressed in Q2 with some physician skepticism, Biogen countered with real-world data and lower ARIA rates | New in Q2; not repeated in Q4. Indicates periodic scrutiny, though overall remain committed to data-driven messaging. |
Strategic Diversification into Rare Diseases and Immunology | Emphasized lupus (litifilimab) and expansion in rare diseases in Q1 | Showcased lupus portfolio, felzartamab in rare renal disorders, SKYCLARYS for Friedreich’s ataxia | Persistent priority; expanding pipeline in rare/immunology to offset MS decline. Potential major growth driver. |
-
Sustainable Revenue Growth
Q: Can Biogen get back to sustainable revenue growth based on internal assets?
A: CEO Chris acknowledged that declining MS revenues pose a headwind, but they're optimistic about offsetting this with products like LEQEMBI, which has significant potential. They are encouraged by recent results and confident in upcoming catalysts. SKYCLARYS is expected to continue growing, and ZURZUVAE is considered an interesting addition. The real growth story lies in the pipeline as new products mature. Biogen doesn't feel pressured to make acquisitions but is open to deals that enhance shareholder value. -
M&A and Capital Deployment
Q: How do recent M&A choices impact Biogen's capital deployment strategy?
A: Chris explained that the company's interest in significant acquisitions is inversely proportional to confidence in their pipeline. With increased confidence in their current pipeline, Biogen doesn't feel compelled to pursue large acquisitions but remains open to opportunities like the Reata deal if they make financial sense. They are cautious about current market valuations and prefer to focus on enhancing shareholder value through disciplined investments. -
LEQEMBI Revenue Trajectory
Q: What's driving LEQEMBI's short-term revenue growth, and is it sustainable?
A: LEQEMBI's U.S. revenue grew by 200% from Q1 to Q4, showing significant domestic growth. Ex-U.S. markets have also been strong. Chris anticipates continued progress in 2025 with potential acceleration from IV maintenance and future subcutaneous formulations. They expect to expand the prescriber base and believe growth will continue over the next two to three years. -
SKYCLARYS Growth Prospects
Q: How can Biogen accelerate SKYCLARYS revenue growth, particularly in the U.S.?
A: Chris outlined strategies including using AI and social media to identify patients and targeting genetic testing to improve diagnosis rates. They are educating physicians through multi-channel marketing to raise awareness of Friedreich's Ataxia. Reimbursement isn't an issue in the U.S., and they expect progressive growth as they add more countries internationally. -
Royalty Pharma Deal Impact
Q: How does the Royalty Pharma deal affect 2025 R&D expenses?
A: CFO Mike explained that the $200 million from Royalty Pharma in 2025 will be accounted for as a reduction to R&D expense. This reduction is included in their guidance, and while they see this as a one-off transaction, it's a useful model to spread investment across more assets. -
SPINRAZA U.S. Market Dynamics
Q: What's happening with SPINRAZA in the U.S. market?
A: Chris noted that SPINRAZA operates in a very competitive market with limited patients. They focus on efficacy where it matters most, particularly among younger patients. The high-dose version will be important for achieving therapeutic levels faster, and they are developing a device to make intrathecal injections more patient-friendly, expected around 2026. -
Operating Expenses Outlook
Q: Is the $3.9 billion OpEx guidance a good baseline for the future?
A: CFO Mike confirmed that $3.9 billion is a good baseline for modeling future OpEx. The Fit for Growth program was designed to align expenses with revenue expectations. While launches may require investment, they plan to prioritize and avoid increasing overall expenditure unnecessarily. -
Impact of GLP-1s in Alzheimer's
Q: How could successful GLP-1 trials in Alzheimer's affect Biogen's programs?
A: Priya acknowledged the interesting hypothesis but noted that previous trials with similar mechanisms failed to meet endpoints. While they await the results, they continue to believe that addressing the central pathology with anti-amyloid agents like LEQEMBI will play an important role in treating Alzheimer's disease. -
Blood-Based Diagnostics for LEQEMBI
Q: How important are blood-based diagnostics for LEQEMBI's adoption?
A: Priya emphasized that accurate diagnosis and confirmation of amyloid remain crucial. She expects in vitro diagnostics approved by the FDA to be available in the near term, with companies like FujireBio already filed and others like C2N and Roche working on tests. These developments are moving fast and could significantly impact patient care pathways.