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How Biogen Makes Money in 2022 and How They Defied Gravity

Key points to remember

  • Biogen saw its stock price soar after groundbreaking news about its new treatment for Alzheimer’s disease that could improve the lives of millions of Americans and billions around the world.
  • Biogen desperately needed good news after its previous Alzheimer’s treatment, Aduhelm, was a commercial failure.
  • Biogen discovers, develops and delivers innovative therapies worldwide to people suffering from serious neurological diseases.

You may have heard some overwhelmingly positive news for Biogen lately – this stock has been a rare winner during a period of extreme volatility in the stock market due to constant rate hikes.

Biogen Inc. (BIBB) is one of the world’s oldest biotechnology companies, having been founded in 1978. Biogen has a portfolio of treatments for multiple sclerosis, spinal muscular atrophy and other neurological diseases. Biogen is focused on advancing its neuroscience pipeline to transform the level of care patients receive.

Let’s break down Biogen’s stock to see how the company makes money and it’s a worthwhile investment.

Biogen Revenue Report

Biogen reported revenue of $2.589 billion for the second quarter of 2022, down 6% year-over-year. The company also reported earnings per share (EPS) of $7.24, up from $2.99 ​​in the same period a year earlier. The company also expects revenue of between $9.9 billion and $10.1 billion for 2022. Biogen’s second-quarter net income was $1.06 billion. The company also cut costs and expenses by 40% to $1.32 billion.

It should be noted that after the release of the second quarter earnings report on July 20, the stock fell slightly as investors were disappointed with the lack of a strategy for life after the commercial failure of its controversial anti-inflammatory drug. Alzheimer’s disease. Biogen only saw about $100,000 in sales for Aduhelm, mostly because Medicare wouldn’t pay him.

One analyst called the quarterly report “good.” Many analysts also felt the company was on hold. We’ll dive into some major recent changes that have dramatically improved the company’s outlook.

How does Biogen make money?

The company breaks down its revenue into three segments in its earnings reports:

  • Some products. More than $2 billion came in from it last quarter, as it covers sales of its treatments for different diseases (multiple sclerosis and spinal muscular atrophy :).
  • Revenues from Anti-CD20 therapeutic programs. This program brought in $436.3 million, down from the same period last year when it brought in $440 million.
  • Other. These revenues come from collaborations, technology development agreements, royalty income on certain products, and other smaller sources.

Biogen derives most of its revenue primarily from its multiple sclerosis treatments, with Tecfidera being the company’s largest producer.

Analysis of biogen stocks

Biogen stock has seen a significant 32% increase over the past month. Meanwhile, many other stocks fell on fears of a possible recession after the Fed’s recent rate hikes. Biogen stock closed Oct. 5, 2022 at $261.69, up 7.19% for the year.

Biogen shares jumped 39.85% on September 28 after the publication the evening before of the positive results of the latest treatment for Alzheimer’s disease. On September 27, Biogen stock closed at $197.79, then on September 28 the stock closed at $276.61 after hitting highs of $283 during the day. With the stock currently hovering around $261, all 2022 losses have been corrected, making Biogen a rare winner in a market that has seen a lot of volatility.

Biogen’s growth prospects

The news that broke Sept. 27 regarding Biogen’s product development could only be described as a bombshell, in a good way. The Alzheimer’s disease treatment, Lecanemab, is going through late-stage clinical trials that show promise for Biogen and partner Eisai. The stock’s growth exploded when Eisai revealed that this new drug slowed cognitive decline by 27% in patients with early-stage Alzheimer’s disease after 18 months. These results were better than expected, causing the share price to soar.

What’s wrong with Lecanemab?

This new drug slowed the progression of Alzheimer’s disease by 27%, which exceeded the study’s efficacy threshold. There is now more hope for patients suffering from this terrible disease around the world.

Biogen obtained FDA regulatory approval for Aduhelm for the treatment of Alzheimer’s disease last year, but the rollout has been quite slow as some exports were not in favor of the approval. The drug was also controversial because experts felt it had not properly demonstrated efficacy in clinical trials. It is important to mention that Lecanemab has performed better so far in tests.

Investors are hoping this new treatment will hit the market soon. The FDA is still reviewing the data to determine whether conditional advance approval will be granted. In the United States, approximately 6.5 million people over the age of 65 are currently living with Alzheimer’s disease. This new treatment could be life-changing and extremely profitable for Biogen.

In other surprising news, Biogen announced on September 28 that they had agreed to pay $900 million to settle a lawsuit alleging the company bribed doctors to convince them to prescribe its drugs to patients. .

How is the competitive landscape looking for Biogen?

It should be mentioned that Biogen is not alone in the fight to beat Alzheimer’s disease; competitors are also working on breakthrough drugs. When news of Biogen’s breakthrough treatment broke, competitors like Eli Lilly (LLY), Roche (RHBBY) and Prothena (PRTA) also rose in value the next day. Eli Lilly shares rose nearly 7%. The market viewed Biogen’s victory as a win for all, as these companies are also testing new treatments for Alzheimer’s disease.

Biogen currently has a market cap of $39.975 billion. Eli Lilly has a market capitalization of $317.014 billion. However, we must point out that while these two big companies are competing for the next treatment for Alzheimer’s disease, there are many other competitors worth mentioning:

  • Seagen (SGEN). This biotechnology company focuses on the development and commercialization of therapies for the treatment of cancer.
  • Amgen Inc. (AMGN). One of the largest independent biotechnology companies in the world.
  • Johnson & Johnson (JNJ). This popular company offers a variety of health products at the consumer and medical industry levels.
  • Moderna (ARNM). They are developing mRNA-based drugs for infectious and cardiovascular diseases.

What’s next for Biogen?

While news of the positive clinical trial results was enough to help the stock soar, it’s important to think about the aftermath of Biogen’s actions. The company is in a strong enough financial position to be able to market the new product. With fast-track FDA approval, Biogen doesn’t have much room for error. We have to be careful because we have seen what has happened in the past with treatment for Alzheimer’s disease.

The next earnings report is scheduled for October 25, 2022. As Biogen stock soared while other stocks fell due to rising rates, it will be interesting to see if this company will be as resilient to recession than many other health care stocks have been. the past.

In the meantime, we turned to analyst recommendations to see what they had to say about Biogen’s stock. (When analyzing a stock, we tend to look to what proven expert analysts say about the company for additional perspective.) We found that 33 analysts recommended Biogen stock as a strong buy in this moment.

How should you invest?

Even though inflation and interest rates have skyrocketed, Biogen has performed well recently. The stock was able to wipe out all of its losses for the year in a single day when news broke about Lecanemab’s progress in fighting Alzheimer’s disease.

That being said, it’s worth remembering how risky investing in the stock market was in 2022. It’s also crucial that you only add Biogen stock to a well-diversified portfolio, because the company is really betting on that. new product to increase revenue.

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The announcement of this new treatment for Alzheimer’s disease was monumental for the company and for the Biogen strain. We will be watching this situation closely to see how this stock performs as fears of a possible recession persist. If the new treatment hits the market in the near future, it’s unclear how much Biogen’s stock could skyrocket.

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