Biogen's Skyclarys Surge Masks Deeper Valuation and Competitive Risks

What happened

Biogen shares rose 15.1% in 2025, driven by optimism around new product launches, particularly the Friedreich's ataxia therapy Skyclarys. Skyclarys sales reached $132.9 million in Q3 2025, up 29.9% year-over-year, contributing to EBIT growth as highlighted in a recent Seeking Alpha article. However, the DeepValue report indicates the stock trades approximately 89% above its intrinsic value based on free cash flow, suggesting market over-enthusiasm amid structural erosion in core multiple sclerosis revenues. The company faces intense competition, including from Eli Lilly's Kisunla in Alzheimer's, and safety constraints on Leqembi that may limit broad adoption. Despite near-term revenue stabilization, Biogen's transition from legacy franchises to new growth pillars remains fraught with execution, reimbursement, and pricing risks.

Implication

The strong performance of Skyclarys demonstrates Biogen's ability to launch new therapies, but it represents a modest contribution compared to the declining MS segment. Market optimism may be premature given the structural erosion in core products and the high bar for new assets to offset this decline. Payer resistance and safety issues for Leqembi could cap Alzheimer's growth, limiting the upside priced into the stock. Biogen's reliance on business development and M&A adds uncertainty, as returns on these investments are yet to be proven. For value-oriented investors, the risk/reward skews negatively unless growth from new products materially exceeds conservative expectations.

Thesis delta

The Seeking Alpha article highlights Skyclarys' strong sales growth, but this does not shift the DeepValue thesis of a potential sell due to overvaluation. Biogen's stock price rise in 2025 reflects optimism, yet the fundamental concerns about eroding MS cash flows and high execution risks remain unchanged.