The new drug Leqembi is selling well, helping to exceed expectations for performance and highlighting the pressure on future profit growth for Biogen Inc. (BIIB.US).

Biogen (BIIB.US) released fourth quarter results that exceeded revenue and profit expectations, showing progress in cost-cutting measures and growth in new products including the breakthrough Alzheimer's disease treatment drug Leqembi. However, this biotechnology company's performance guidance for this year did not meet Wall Street's expectations. For the fourth quarter ending on December 31, Biogen's earnings per share, excluding certain items, were $3.44, a 17% increase year-over-year, higher than analysts' expected $3.35. Revenue increased by 3% to reach $2.46 billion, surpassing analysts' expected $2.40 billion. Leqembi generated approximately $87 million in revenue, exceeding market expectations. This drug, developed in partnership with Japan's Eisai Co., brought in $67 million and $40 million in revenue in the previous two quarters. While these results offer a glimmer of hope for Biogen's recovery after years of declining sales, the company stated that the new therapy will take time to offset the decline in its multiple sclerosis treatment drug product line. Due to the impact of a strong U.S. dollar and intense competition faced by its multiple sclerosis treatment drugs, Biogen expects adjusted earnings per share to be between $15.25 and $16.25 in 2025, lower than analysts' expected $16.34. The company noted that the guidance does not include any potential effects from acquisitions, tax changes, or healthcare reform as these factors are difficult to predict. Excluding the impact of exchange rate fluctuations, sales are expected to decrease by a "mid-single-digit percentage" in 2025. In 2024, investors continued to sell Biogen stocks and as of Wednesday's closing, Biogen's stock price has fallen by 9% this year, reflecting investor caution regarding Leqembi's prospects. The drug was approved in January 2023 but has faced logistical challenges and resistance from European regulatory authorities, hindering its global promotion. In 2022, Biogen appointed former Sanofi (SNY.US) CEO Christopher Viehbacher as its CEO. He initiated a $1 billion cost-saving plan and completed several transactions in 2023, including the $6.5 billion acquisition of Reata Pharmaceuticals. Viehbacher is focused on driving sales growth for Leqembi, reducing costs, and reducing the company's reliance on high-risk neuroscience treatments. In 2023, Biogen announced a workforce reduction of 1,000 employees (more than 11% of its total workforce) and plans to further cut $700 million in operating expenses by 2025. CEO Viehbacher stated, "Our financial discipline enabled us to restructure operating expenses and reallocate resources to potential future growth drivers." On Wednesday, Royalty Pharma (RPRX.US) also announced an agreement with Biogen to provide $250 million in research funding for its key drug litifilimab in the pipeline, which is being studied for the treatment of lupus. As a major funder in the biotechnology and pharmaceutical industry, Royalty Pharma will be eligible for regulatory milestone payments and certain royalty fees. In other new drug developments, Skyclarys had sales of $102 million in the fourth quarter, nearly double the sales from the same period last year, with analysts expecting around $112 million. Skyclarys comes from Biogen's acquisition of Reata Pharmaceuticals. The FDA approved Skyclarys in 2023, making it the first approved drug for the treatment of Friedrich's ataxia, a rare genetic degenerative disease that may affect the walking and coordination abilities of children as young as five years old. The first oral drug for postpartum depression, Zurzuvae, had sales of $22.9 million in the fourth quarter, lower than analysts' expected $26 million. At the same time, sales of Biogen's multiple sclerosis treatment drugs decreased by 8% to $1.07 billion.