2. Biogen Inc. (NASDAQ:BIIB)
Average Upside Potential: 43.33%
Number of Hedge Fund Holders: 46
Biogen Inc. (NASDAQ:BIIB) specializes in the discovery, development, and delivery of therapies for the treatment of neurological diseases to patients worldwide. It has a strong track record in the development of treatments for multiple sclerosis, Alzheimer’s disease, and spinal muscular atrophy, with research and development efforts aimed at addressing unmet medical needs and improving the lives of patients with neurological disorders.
The company’s focus on Alzheimer’s disease and other growth areas drive the recent full FDA approval of Leqembi, its second Alzheimer’s drug. Leqembi is expected to generate over $3.5 billion in peak revenue by the early 2030s. Biogen also has a promising pipeline, including BIIB080 (Alzheimer’s), BIIB122 (Parkinson’s), and Felzartamab (kidney disease), which has shown positive Phase 2 results.
It generated $592 million in free cash flow in Q2, driven by its high profit margins of 39%. Revenue in the second quarter of 2024 was up 0.36% year-over-year, recording a total amount of $2.46 billion. Core pharmaceutical revenue was up 5%, driven by the performance of four recent launches, which more than offset the 5% revenue decline in the MS business, with erosion in interferon business and generic competition in the EU.
TECFIDERA and VUMERITY showed growth, while TYSABRI declined due to shipment timing and competition. Rare disease franchise revenue grew 22%, driven by SKYCLARYS. LEQEMBI in-market sales reached $40 million in Q2.
It’s actively expanding its operations, having recently acquired Human Immunology Biosciences and gained drug approvals in various countries. The company has made significant strides in improving its business by launching new drugs, reducing costs, investing in R&D, growing externally, and optimizing its existing portfolio. Biogen Inc. (NASDAQ:BIIB) expects to secure approvals in 20 countries by the end of the year, demonstrating its commitment to growth, positioning it for long-term success.
Patient Capital Opportunity Equity Strategy stated the following regarding Biogen Inc. (NASDAQ:BIIB) in its Q2 2024 investor letter:
“Biogen Inc. (NASDAQ:BIIB) is another name that we believe is underappreciated. As a global biopharmaceutical business, the company is most well known for their products in multiple sclerosis, spinal muscular atrophy, and most recently Alzheimer’s disease. The new CEO, Christopher Viehbacher, is working to improve the company’s pipeline, most recently with their acquisition of Human Immunology Biosciences Inc. in May. Chris has a strong track record of successful M&A and we expect him to continue that tradition. More importantly, we think the market is currently giving the company no credit for success in their Alzheimer’s indication. While the uptake in Leqembi, their Alzheimer’s product, has been slow, we still see strong long-term potential for a patient population that is dramatically underserved. We find the risk/reward extremely attractive.”
