Biogen: Lowering Our Moat Rating to Narrow Based on MS Sales Pressure and Leqembi Uncertainty

We're lowering Biogen's moat rating to narrow from wide after reassessing the firm's competitive advantages. As the firm faces steady pressure on its older multiple sclerosis drugs from generic and branded competitors, we think returns on invested capital will be under pressure, particularly as Alzheimer's drug Leqembi (via a collaboration with partner Eisai) has launched more slowly than we had expected. We still think global Leqembi sales will eventually surpass $6 billion, but we see high uncertainty around this estimate and around our Biogen valuation more broadly. We assume that Biogen’s share of revenue (from partner Eisai) won’t be significant until 2025 as Biogen and Eisai are in the process of boosting their marketing efforts and expanding approval to include maintenance and subcutaneous dosing.