Biogen Inc. (BIIB) Q2 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call summary and Q&A indicate strong product development and market strategy, with LEQEMBI holding a significant market share and plans for subcutaneous administration as a differentiator. Despite a mid-single-digit revenue decline forecast, optimistic guidance, cost savings initiatives, and a robust pipeline suggest positive sentiment. The lack of material tariff impact and strong partnerships further support a positive outlook.

Key Financial Performance

Revenue Growth Biogen delivered 7% revenue growth in Q2 2025, driven by strong commercial execution, particularly from its 4 launch products, which generated $252 million in revenue, and the U.S. MS business. This growth offset declines in other areas.

Non-GAAP Diluted EPS Non-GAAP diluted EPS grew 4% in Q2 2025. Excluding the $0.26 impact from acquired IPR&D upfront and milestone expenses, non-GAAP diluted EPS would have been $5.73, up 9% year-over-year. The growth was attributed to strong commercial execution and disciplined operating expense management.

MS Franchise Revenue The U.S. MS business generated $657 million in revenue in Q2 2025, driven by higher VUMERITY demand, favorable inventory dynamics, and a $48 million favorable gross-to-net change in estimate impact. However, outside the U.S., sales were impacted by expected generic pressures for TECFIDERA and a biosimilar for TYSABRI in Europe.

SPINRAZA Revenue SPINRAZA revenue remained consistent globally. However, ex-U.S. SPINRAZA was impacted by the drawdown of inventory build from Q1 2025, which is expected to continue into Q3. Full-year global SPINRAZA revenue is expected to remain relatively similar to 2024.

Launch Products Revenue The 4 launch products (LEQEMBI, SKYCLARYS, ZURZUVAE, and others) delivered $252 million in revenue in Q2 2025, an increase of 26% quarter-over-quarter and 91% year-over-year. This growth offset the decline in the MS portfolio.

LEQEMBI Revenue LEQEMBI global end-market sales booked by Eisai were approximately $160 million in Q2 2025, including a $35 million favorable impact from the timing of shipments to China. Excluding this, global sales grew 29% sequentially and 211% year-over-year.

SKYCLARYS Revenue SKYCLARYS revenue grew 5% globally compared to the last quarter. U.S. revenue grew 13% quarter-over-quarter, driven by a shift in focus to community neurologists and primary care providers. Internationally, revenue was negatively impacted by the timing of shipments in certain markets.

ZURZUVAE Revenue ZURZUVAE revenue was $46 million in Q2 2025, up 213% year-over-year and 68% quarter-over-quarter. Growth was supported by a 29% increase in new prescribers and expanded field team efforts.

Contract Manufacturing Revenue Contract manufacturing revenue increased due to the acceleration of timing for manufacturing batch releases, some of which were associated with LEQEMBI. This was done ahead of planned Q4 2025 plant maintenance activities.

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Operating Highlights

VUMERITY: Achieved growth due to emphasis over the last 2 years, with significant market exclusivity remaining.

LEQEMBI: Consistent growth observed, with enablers like blood-based biomarkers and upcoming PDUFA date for subcutaneous formulation. U.S. Alzheimer's market evolving, with increased diagnostic and treatment capabilities, and 20% quarter-over-quarter revenue growth.

SKYCLARYS: Available in 29 markets globally, with strong early access program uptake and ongoing reimbursement efforts. Expanded into 29 global markets, including key European countries and Brazil, with 5% global revenue growth.

ZURZUVAE: Outperformed internal expectations, with approval in Europe and planning for launch. Planning European launch following approval, with 68% quarter-over-quarter revenue growth in the U.S.

Salanersen: Interim Phase Ib data showed proof of concept for SMA, with significant motor milestone improvements and plans for Phase III trials.

Fit for Growth initiative: Reallocated capital to prepare for 4 new U.S. launches, optimizing investments in MS.

Cost management: Achieved disciplined operating expense management, contributing to 4% non-GAAP diluted EPS growth.

Manufacturing investments: Planned modernization and capability expansion in North Carolina to support late-stage pipeline.

Pipeline transformation: Initiated 3 Phase III studies, expanded felzartamab into a fourth indication, and advanced lupus and SMA treatments.

Business development: Concluded research agreement with City Therapeutics and exploring further collaborations.

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Risk or Challenges

Market exclusivity and competition: While VUMERITY has market exclusivity, there are concerns about increasing competitive pressures, particularly for TECFIDERA in Europe, which is facing generic competition. This could impact revenue streams.

Regulatory and reimbursement hurdles: SKYCLARYS is not yet reimbursed in all markets, and the company is working country by country to secure reimbursement. This creates delays and uncertainties in revenue realization.

Supply chain and inventory management: The company experienced timing issues with shipments in certain markets for SKYCLARYS and LEQEMBI, which could lead to revenue fluctuations.

Economic and policy uncertainties: The company acknowledges macroeconomic factors and policy uncertainties that could impact operations, although it believes its business model is resilient.

Pipeline and R&D risks: While the pipeline shows promise, there are risks associated with moving products like salanersen to registrational studies and expanding indications for felzartamab. These require significant investment and carry inherent uncertainties.

Operational and cost management: The company is undergoing plant maintenance activities that will result in minimal contract manufacturing revenue in Q4 2025, potentially impacting financial performance.

Market adoption and awareness: Despite growth in LEQEMBI and ZURZUVAE, patient and caregiver awareness of new treatments remains low, which could limit market adoption.

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Guidance & Outlook

Revenue Expectations: Biogen raised its full-year 2025 non-GAAP diluted earnings per share guidance to $15.50-$16.00, reflecting stronger expected business outlook. Total revenue for 2025 is now expected to be approximately flat compared to full-year 2024, with strong first-half performance offset by expected competitive pressures in the second half.

Product Growth Projections: LEQEMBI is expected to continue its growth trajectory, supported by a direct-to-consumer campaign and potential subcutaneous formulation approval. SKYCLARYS is projected to grow globally, with ongoing efforts to secure reimbursement in European markets and Brazil. ZURZUVAE is anticipated to expand internationally following a positive CHMP opinion in Europe.

Pipeline Developments: Biogen plans to advance salanersen into registrational studies for SMA and expand felzartamab into a fourth indication for late microvascular inflammation. The company is also preparing for multiple key scientific milestones and regulatory outcomes over the next 12-18 months, including LEQEMBI subcutaneous maintenance and high-dose SPINRAZA.

Market Trends and Infrastructure: The U.S. Alzheimer's market is evolving, with increased adoption of diagnostic and treatment capabilities. Biogen is focusing on improving PCP referrals and leveraging blood-based biomarker testing to enhance LEQEMBI adoption.

Capital Expenditures: Biogen plans to invest in modernizing and expanding its North Carolina manufacturing operations to support its late-stage pipeline and future product launches.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Could you remind us whether there's a similar interim in AHEAD 3-45 and maybe more broadly discuss the differences in design between AHEAD 3-45 and TRAILBLAZER-ALZ 3?

A:AHEAD 3-45 consists of two trials: AHEAD 3, which focuses on preventing further accumulation of amyloids, and AHEAD 45, which aims to prevent cognitive decline in patients with greater than 40 centiloids amyloid in the brain. Recruitment was specific, using amyloid PET screening and a CDR global score of 0 (no cognitive decline), unlike competitors who included mixed criteria. AHEAD 3 uses a biomarker endpoint, while AHEAD 3-45 uses a preclinical Alzheimer's disease composite endpoint. The readout is planned for 2028, with optionality for interim analysis.

Q:Could you comment on the competitive dynamics of LEQEMBI in the U.S. market, especially with donanemab's recent label update?

A:LEQEMBI holds about 70% of the market share despite competition. The market has grown by 15% in new patient starts, and LEQEMBI has driven new writer growth, with 70% of new writers coming from new sites of care. The label update for donanemab has not significantly changed dynamics yet, as physicians were already using similar dosing regimens. LEQEMBI's maintenance and potential subcutaneous options are seen as competitive advantages.

Q:How do you think myostatin products could change the SMA market dynamics, and how would that impact SPINRAZA?

A:Myostatin products are seen as an additive benefit for patients but not as a main competitor to SPINRAZA or other SMA therapies. They are not expected to significantly impact SPINRAZA's market position.

Q:Could you provide an update on the lupus pipeline, including dapirolizumab and litifilimab, and how you view the competitive landscape?

A:Dapirolizumab is one of the few agents with a positive Phase III trial, showing impact on BICLA, severe flares, and steroid sparing. Litifilimab targets the type 1 interferon signature and has shown proof-of-concept in Phase II. Data for the second Phase III trial of dapirolizumab is expected in 2027-2028, while litifilimab SLE data is expected late next year. The company is also exploring felzartamab for lupus nephritis. Despite a competitive landscape, the company believes its multi-mechanistic approach addresses significant unmet needs.

Q:What is the status of Biogen's relationship with Eisai, especially in light of the arbitration over commercialization allocations in Europe?

A:The relationship with Eisai is described as strong, with close collaboration across various committees and functions. The arbitration over European commercialization allocations is seen as a normal disagreement in partnerships and has not affected the overall working relationship.

Q:How is Biogen addressing the use of blood-based biomarkers for Alzheimer's diagnosis, and what impact could this have on the market?

A:Blood-based biomarkers are evolving rapidly, with testing tripling in the past year. Neurologists and PCPs are adopting these tests, primarily for triage. Most physicians still confirm positive or indeterminate results with CSF or PET scans. Biogen is focusing on education, real-world evidence, and payer clarity to establish these tests as a standard for amyloid confirmation, which could significantly accelerate diagnosis.

Q:What feedback has Biogen received about subcutaneous LEQEMBI, and how does it plan to position this option in the market?

A:Subcutaneous LEQEMBI is seen as a key differentiator, offering convenience and optionality. Physicians and patients appreciate the flexibility, with rural patients likely favoring subcutaneous administration. Biogen is also exploring support for at-home injections. The option is expected to streamline infrastructure and reduce barriers to treatment.

Q:How is Biogen approaching business development, and what areas are they focusing on?

A:Biogen is focusing on early-stage assets, particularly in I&I, to address pipeline gaps. The company is also open to late-stage M&A if it aligns strategically and financially. Recent efforts include revamping the research organization and pursuing partnerships like City Therapeutics and HI-Bio to integrate entrepreneurial teams with Biogen's capabilities.

Q:How does Biogen view the market potential for felzartamab in AMR and other indications?

A:The addressable market for AMR is estimated at $1.5 billion, with about 11,000 patients per year. Felzartamab is expected to be first to market, targeting CD38-positive natural killer cells. Biogen is also exploring its use in late MVI, a newly classified kidney transplant rejection phenotype, which could add 5,000-6,000 patients to the potential market.

Q:Review of Unclear Management Responses

A:Management avoided directly addressing the potential impact of donanemab's label update on LEQEMBI's market share, using vague language about ongoing monitoring and market research. Similarly, they did not provide specific details on how subcutaneous LEQEMBI initiation would be implemented logistically, instead emphasizing optionality and flexibility.

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Earnings Word Cloud

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Biogen's earnings call reflects a positive outlook with strong financial guidance, product growth, and strategic advancements. The Q&A section revealed management's confidence in pipeline expansion and strategic focus on Alzheimer's and immunology, despite some concerns about competition and capacity challenges. The announcement of increased revenue expectations and strategic product developments, along with positive feedback on new formulations, suggests a favorable market reaction. However, the lack of specific guidance on some products and competitive pressures could temper enthusiasm. Overall, the sentiment leans towards a positive stock price movement.

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