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Biogen agrees to acquire neurological disease specialist Reata Pharmaceuticals at 60% premium

Published 07/28/2023, 07:38 AM
Updated 07/28/2023, 07:44 AM
© Reuters Biogen agrees to acquire neurological disease specialist Reata Pharmaceuticals at 60% premium

On the prowl for a deal for months, Biogen (Nasdaq: NASDAQ:BIIB) pulled the trigger on Friday. The biotech giant agreed to acquire neurological disease specialist Reata Pharmaceuticals, Inc. (Nasdaq: NASDAQ:RETA) for $172.50 per share, or $7.3 billion. The deal comes as a nearly 60% premium to Thursday's closing price for Reata.

Reata recently received FDA approval for SKYCLARYS, the only treatment indicated for patients with Friedreich’s ataxia. Reata is also developing a portfolio of innovative products for a range of neurological diseases.

“With extensive expertise in rare disease product development and global commercialization, as demonstrated by SPINRAZA and the recent launch of QALSODY, we believe Biogen has the foundation in place to accelerate the delivery of SKYCLARYS to patients around the world,” said Christopher Viehbacher, Biogen’s President and Chief Executive Officer. “This is a unique opportunity for Biogen to bolster our near-term growth trajectory, and SKYCLARYS is an excellent complement to our global portfolio of treatments for neuromuscular and rare disease.”

Biogen said the deal is expected to be significantly accretive to its Non-GAAP diluted EPS beginning in 2025.

Biogen expects to finance the acquisition with cash on hand, supplemented by the issuance of term debt.

The deal is expected to close in the fourth quarter of this year.

Stifel analysts said the deal makes "a lot of sense" for Biogen.

"We’ve thought that Reata is one of the few logical takeover targets for Biogen: (1) meets the objective of near-term revenue growth, (2) fits within Biogen’s rare/disease neuro footprint, and (3) Skyclarys should launch rapidly, which is key given existing concerns that 2024 with the existing business may be a down year for revenues," they commented. "The purchase price of >$7B is hefty, but not if Skyclaris can meet $1B in revenues (2027 consensus); we expect the debate here to be on peak sales and whether FA is truly that big."

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While the deal was not a bargain "we think this is a good move for Biogen for a synergistic asset that has a high floor value," the analysts added.

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