Biogen Inc., a multinational biotechnology company based in Cambridge, has made a strategic decision to acquire Reata Pharmaceuticals, a prominent rare disease drug manufacturer, for a substantial sum of 6.5 billion dollars. This acquisition is primarily driven by Biogen’s interest in obtaining Skyclarys, a recently approved rare disease drug developed by Reata Pharmaceuticals.
According to Biogen CEO Christopher Viehbacher, the company firmly believes that they have already established a strong foundation to expedite the global availability of Skyclarys to patients. Skyclarys is a groundbreaking treatment designed to address a rare genetic disorder that leads to the gradual deterioration of the nervous system.
Biogen announced its intention to acquire Reata Pharmaceuticals at a price of $172.50 per share in cash, signifying a substantial 58.9% premium over the stock’s previous closing price. With the inclusion of debt, the overall deal places an approximate valuation of Reata Pharmaceuticals at around $7.3 billion.
Skyclarys, developed by Reata Pharmaceuticals, has been approved as the first-ever treatment for Friedreich’s ataxia, a rare condition that affects approximately one in every 50,000 individuals in the United States. The drug is priced at an annual list price of $370,000.
Biogen’s acquisition strategy focuses on companies that specialize in developing and producing drugs for rare diseases. By pursuing such deals, Biogen aims to enhance its near-term growth prospects, particularly in areas like rare diseases and immunology.
According to Refinitiv data, sales of Skyclarys are projected to reach $1.3 billion by 2029. Analysts have suggested that Biogen has the potential to leverage its current infrastructure to expedite the drug’s launch, maximizing its market impact and benefiting patients in need of the treatment.
Biogen’s initial strategy was to rely on the launch of its new Alzheimer’s drug, Leqembi, which was being marketed in collaboration with Eisai, to drive growth and boost profits. However, the launch faced delays due to the significant costs associated with its introduction, potentially offsetting the expected modest sales for the current year.
It is worth mentioning that Biogen already manufactures Spinraza, an effective treatment for the rare muscle-wasting condition known as spinal muscular atrophy. Additionally, the company offers treatment for a rare form of amyotrophic lateral sclerosis.
CEO Viehbacher stated that while the deal was significant in size, it would not hinder Biogen from pursuing future acquisitions.
Baird analyst Brian Skorney expressed positive sentiments about the overall outline of the deal but highlighted that the price could be a challenging factor. He emphasized that for the drug to achieve blockbuster status, it would be essential to secure European approval in addition to its existing approvals.
