Reata Pharmaceuticals will be acquired by Biogen for more than $7 billion, enabling it to improve its therapies for rare diseases.
The company that is developing an Alzheimer’s drug announced on Friday that it will pay $172.50 in cash for each share of Reata in a deal that it hopes to complete by the end of the year.
Based in Plano, Texas Reata focuses on creating medications for severe neurologic conditions that control inflammation and cell metabolism. It makes Skyclarys, an FDA-approved medication for Friedreich’s ataxia, a neurological condition.
The transaction, according to Biogen, has an enterprise value of $7.3 billion and is expected to slightly lower adjusted earnings per share this year, be about neutral the following year, and then become “significantly accretive” in 2025.
The transaction still needs approval from regulators and Reata shareholders.
Techfidera, Tysabri, and Spinraza, two medications used to treat spinal muscular atrophy, are all produced by Biogen. It also collaborates with Japanese pharmaceutical company Eisai to market the new Alzheimer’s medicine Leqembi.
Skyclarys, which is being evaluated by European regulators, will benefit from the company’s experience producing and marketing therapies for rare diseases, according to CEO Christopher Viehbacher.
According to Johns Hopkins Medicine, Friedreich’s ataxia is brought on by a gene abnormality that is inherited from both parents. It may cause cardiac issues, hearing loss, vision loss, and walking difficulties. It causes many patients to end up in a wheelchair.
Since taking over as CEO of Biogen in November of last year, Viehbacher has concentrated on reducing expenses there while also expanding the company’s drug development pipeline. Aduhelm, Biogen’s attempt to treat Alzheimer’s, was not successful, and the company has been grappling with declining revenues for its multiple sclerosis medications.
Viehbacher stated that Biogen is “laser-focused” on altering the direction of the company’s share price on Tuesday, following the release of the company’s better-than-anticipated second-quarter results.
Our stock price hasn’t changed much in the last ten years, so that’s where we are concentrating on actually increasing… shareholder value, he said. And to do that, capital must be allocated in a manner that is proportionate to that.
In pre-market trading on Friday, shares of Reata Pharmaceuticals Inc. jumped 52% to $165. Stock in Biogen Inc. increased by 1% to $266.
