Biogen's Subcutaneous Leqembi BLA Accepted in China, Yet Valuation Concerns Loom

What happened

Biogen announced that China has accepted its Biologics License Application for a subcutaneous formulation of Leqembi, targeting early Alzheimer's disease with potential at-home injection convenience. This development aligns with the company's strategy to expand ex-U.S. access for Leqembi, a key growth driver highlighted in the DeepValue report as crucial for offsetting declining MS revenues. However, the report cautions that Biogen's stock is already priced optimistically, trading ~89% above a conservative DCF estimate, largely banking on Leqembi's success despite safety and reimbursement headwinds. The acceptance is merely a regulatory step, with approval and commercial uptake in China facing significant hurdles, including payer pushback and competition from other anti-amyloid therapies like Lilly's Kisunla. While this news supports the narrative of global expansion, it does not address the core risks of execution and valuation overhang that underpin the 'POTENTIAL SELL' stance.

Implication

The BLA acceptance in China represents a step toward broadening Leqembi's market, potentially enhancing convenience and adoption in a key region, which could modestly boost long-term revenue streams. However, this move does not mitigate the substantial headwinds detailed in the DeepValue report, such as payer resistance, ARIA safety concerns, and infrastructure bottlenecks that could cap commercial success. Biogen's valuation remains stretched, with the stock pricing in optimistic scenarios that may not materialize, especially given the company's reliance on new assets while MS cash flows erode. Critical investors should monitor whether actual approval and reimbursement in China proceed smoothly, as delays or restrictions could exacerbate downside risks. In the near term, this news is unlikely to shift the financial trajectory meaningfully, reinforcing the need for caution until clearer evidence of sustainable growth and risk mitigation emerges.

Thesis delta

The acceptance of Leqembi's subcutaneous BLA in China does not fundamentally change the 'POTENTIAL SELL' thesis from the DeepValue report. It represents progress in ex-U.S. expansion, a key watch item, but the stock's premium still depends on overcoming significant hurdles like regulatory approval, safety issues, and competition. Therefore, the stance remains unchanged, with this development reinforcing rather than reducing the execution risks highlighted.