Hook / Thesis
Biogen's FY25 results tell a simple, if mixed, story: EPS held up while the legacy multiple sclerosis franchise softened. The MS business remains material - it was 45% of total revenue in 2024 - and is the clearest headwind to topline expansion. At the same time, collaboration revenue (notably CD20 work with Roche) and growth from newer assets including Leqembi, Skyclarys, Zurzuvae and Qalsody are stabilizing the model and keeping EPS roughly level.
That creates a tradeable setup: fundamentals are not broken, but headline growth is challenged. A tactical, catalyst-aware long makes sense for investors who want asymmetric upside into approvals, commercialization wins for Leqembi, or incremental evidence that non-MS franchises can scale. Size the position modestly and use a tight stop because the MS trajectory and reimbursement politics remain binary risks.
What the business is and why the market should care
Biogen is a mature biopharma company focused on neurology and rare diseases. In 2024 the MS franchise accounted for roughly 45% of total revenue, making it Biogen's single largest cash engine. Collaboration revenue from Roche (primarily CD20 drugs that overlap MS and oncology indications) was ~18% of total revenue in 2024, providing a meaningful recurring cash inflow while the company scales newer drugs.
Why the market cares: Biogen is in the middle of a product mix transition. The MS portfolio is declining, which constrains topline growth, but Leqembi (Alzheimer's), Qalsody (ALS), Zurzuvae (postpartum depression) and rare-disease drugs are offsetting some of that weakness. Regulatory progress for Leqembi's subcutaneous formulation (FDA Priority Review accepted 01/25/2026) and acceptance in China (01/06/2026) are concrete commercialization catalysts that could materially increase the drug's addressable market and at-home use — important for margin and patient access.
Recent financials - the data
Look at quarterly run-rate across FY25:
- Q1 FY25 (01/01/2025 - 03/31/2025): revenues $2.431B, diluted EPS ~1.64, net income $240.5M.
- Q2 FY25 (04/01/2025 - 06/30/2025): revenues $2.6455B, diluted EPS ~4.33, net income $634.8M.
- Q3 FY25 (07/01/2025 - 09/30/2025): revenues $2.5347B, diluted EPS ~3.17, net income $466.5M.
- Q4 FY25 (reported 02/06/2026): EPS actual 1.99 vs estimate 1.63 (quarter ended 12/31/2025).
Adding the quarterly diluted EPS figures gives an FY25 diluted EPS run-rate around $11.13 per share (1.64 + 4.33 + 3.17 + 1.99). Diluted average shares in the most recent quarter were ~147.1M, and the stock last traded about $201, implying a market capitalization in the neighborhood of $29.6B (201 * 147.1M = roughly $29.6B) and an approximate FY25 P/E near 18x (201 / 11.13 ≈ 18.1). Those are rough, but useful framing numbers.
Balance sheet & cash flow (Q3 FY25 snapshot): long-term debt ~ $6.285B, total assets ~$29.21B, equity ~$18.21B, and operating cash flow for the quarter ~$1.2725B. Net cash flow remained positive for the period and operating cash generation supports ongoing R&D and partner-backed commercialization spend.
Valuation framing
The market is currently valuing Biogen at approximately $29.6B using last trade and diluted share count. On an FY25 EPS run-rate (the four quarters we can assemble), that implies an ~18x P/E. For a large-cap biopharma with a mix of mature franchises and several commercialization-phase neurology assets, 15-20x looks like a middle-of-the-road multiple: not dirt-cheap, but not demanding for a company with multiple potential near-term catalysts and solid cash flow.
Qualitatively, the valuation is a function of two offsetting forces: declining legacy MS revenue should compress the multiple absent offsetting growth, while meaningful upside from Leqembi scaling (especially if subcutaneous dosing expands uptake), and steady Roche collaboration royalties, justify the mid-teens multiple. If execution on new franchises accelerates, the current valuation would look attractive; if MS erosion accelerates or reimbursement for high-cost neuro drugs tightens, the multiple could compress rapidly.
Catalysts (near-term to medium-term)
- Regulatory/commercial wins for Leqembi - FDA subcutaneous filing under Priority Review accepted 01/25/2026 and China acceptance (01/06/2026) could expand addressable patient populations and increase at-home dosing adoption.
- Quarterly earnings and guidance that show continued EPS stability or upside (Q4 FY25 result delivered EPS above estimate on 02/06/2026).
- Roche collaboration performance and any royalty or sales updates from CD20 assets that underpin ~18% of historical revenue.
- Any positive readouts or uptake signals for Skyclarys, Zurzuvae or Qalsody that demonstrate non-MS revenue scaling.
Trade idea - actionable, with entries, stops, targets
Thesis: Buy a tactical long sized for a swing trade to capture upside from product approvals/commercial momentum and multiple expansion, while protecting capital against downside from further MS declines or reimbursement shocks.
| Action | Level | Rationale |
|---|---|---|
| Entry | $198 - $204 | Near current trade price (~$201). If you miss this band, look for pullbacks into the $185-$195 area to improve the risk/reward. |
| Initial stop | $175 | Stops below ~12% limit from entry; cuts exposure if MS-driven headlines or broad biotech weakness push re-rating lower. |
| Target 1 (near-term) | $230 | ~14% upside from current price to capture a near-term multiple re-rate on positive Leqembi adoption / earnings beat. |
| Target 2 (upside) | $260 | ~29% upside to capture larger re-rating if commercialization momentum and Roche/partner royalties accelerate. |
Position sizing: treat this as a swing trade equal to a small percentage of portfolio (single-digit percent) depending on risk tolerance. Move stop to breakeven after Target 1 is hit and trim partial position on the way up.
Risk framing - what can go wrong
- MS franchise decline accelerates - MS accounted for ~45% of revenue in 2024; a steeper-than-expected drop would hit top-line and investor sentiment quickly.
- Reimbursement and pricing pressure - Alzheimer’s and novel neurology drugs often face tough payor negotiation and utilization restrictions; weaker access for Leqembi would reduce upside materially.
- Partner / collaboration risk - Biogen depends on Roche and Eisai partnerships for meaningful revenue streams; changes in those relationships or royalty structures would be negative.
- Competition and clinical setbacks - Competing therapies or adverse clinical data for new assets could derail assumed growth.
- Macro / sector risk - Biotech-wide multiple compression or risk-off in equities could push BIIB down regardless of company-specific fundamentals.
Counterargument: The upside from Leqembi and similar assets may already be priced in. The stock's move to a 52-week high around the earnings window suggests some expectations are baked into price. If the market demands faster and clearer proof of large, sustained revenue streams from these newer drugs, the multiple may not expand further and downside is possible on any execution shortfall.
Conclusion and what would change my mind
Conclusion: I favor a cautious, tactical long around current levels with strict risk controls. Biogen's FY25 EPS profile looks stable on the numbers we have — quarterly revenues in the ~$2.4B-$2.65B range and an assembled FY25 diluted EPS near $11.13 produce an ~18x P/E at today’s price. That valuation leaves room for positive regulatory and commercial catalysts to lift the stock, but the decline of the MS franchise is a real constraint.
I would change my view if any of the following occur:
- Clear evidence that Leqembi subcutaneous adoption materially underperforms expectations or payors sharply restrict access.
- Roche collaboration revenue shows unexpected step-downs or contractual changes.
- MS franchise stabilizes or shows sequential recovery driven by market-share gains or new label expansions - that would move me to a longer-term constructive stance and larger position size.
Bottom line: Biogen is a company in transition. EPS and cash flow remain serviceable while the market waits for the next leg of growth. A disciplined, stop-protected long is a reasonable trade to capture upside from regulatory/commercial catalysts while limiting exposure to legacy-franchise risk.
Disclosure: This is a trade idea with explicit entry, stop and targets. It is intended for educational and idea-generation purposes and is not personalized investment advice.