Biogen Inc. Acquiring Reata Pharmaceuticals
July 28, 2023: Biogen Inc. has recently made a significant strategic move by agreeing to acquire Reata Pharmaceuticals Inc. for a whopping $7.3 billion. This acquisition represents a meaningful step forward in Biogen’s plan for sustainable growth. The deal aims to add a highly complementary and innovative product to Biogen’s portfolio, focusing on an area of high unmet medical need.
The key asset in this acquisition is Reata’s recently approved drug, SKYCLARYS® (omaveloxolone), the first and only FDA-approved treatment for Friedreich’s ataxia (FA) in the United States. FA is a rare genetic disorder that causes progressive damage to the nervous system. With the commercial launch of SKYCLARYS already underway and the European regulatory review ongoing, Biogen sees a significant opportunity to bring this treatment to patients worldwide.
Biogen’s President and CEO, Christopher Viehbacher, believes that the company’s extensive expertise in rare disease product development and global commercialization will help accelerate the delivery of SKYCLARYS to patients. The company’s past success with SPINRAZA and the recent launch of QALSODY showcase its capabilities in the rare disease arena.
By acquiring Reata and gaining access to SKYCLARYS, Biogen aims to strengthen its near-term growth trajectory and further solidify its position in the neuromuscular and rare disease market. The deal aligns with Biogen’s strategy to complement its existing portfolio with drugs that boost growth in the short term.
The financial details of the transaction indicate that the acquisition will be accounted for as a business combination. It is expected to be slightly dilutive to Biogen’s Non-GAAP diluted Earnings Per Share (EPS) in 2023 but should become significantly accretive starting in 2025, including associated transaction costs.
To finance the acquisition, Biogen plans to use cash on hand, supplemented by term debt issuance. The deal is subject to customary closing conditions, including approval by Reata stockholders and regulatory approvals.
While this move demonstrates Biogen’s commitment to its growth strategy, it also comes amid the company’s efforts to return to growth following challenges with the controversial Alzheimer’s drug Aduhelm. Biogen has been navigating intense competition in its top-selling drug market, making this acquisition a pivotal step in reshaping its future.
Investors should closely monitor Biogen’s progress in integrating Reata and leveraging SKYCLARYS to achieve its growth objectives. As the deal progresses and new developments emerge, stakeholders can gain valuable insights into Biogen’s positioning in the rare disease market and its potential for future success.
