Biogen is making one of the biggest business bets in its 45-year history, announcing Friday a deal to buy Reata Pharmaceuticals and its newly approved rare disease drug for approximately $7.3 billion.
The Cambridge, Massachusetts-based biotechnology company will pay $172.50 per Reata share, which represents a premium of about 59% over the stock’s closing price Thursday. Biogen expects to fund the deal with cash on hand as well as additional debt.
Acquiring Reata gives Biogen access to Skyclarys, a drug for the neuromuscular condition Friedreich’s ataxia that gained U.S. approval in March. The disease is uncommon, affecting an estimated 5,000 people in the U.S. And its clearance was controversial, following years of back-and-forth with the Food and Drug Administration.
Still, analysts on Wall Street see an opportunity for it to become a significant seller. “While this isn’t a bargain, we think this is a good move for Biogen for a synergistic asset that has a high floor value,” wrote Paul Matteis, an analyst for Stifel, in a note to clients.
In announcing the deal, Biogen noted its past success with the rare disease drug Spinraza, which treats spinal muscular atrophy and last year earned the company $1.8 billion. Biogen also recently won approval of Qalsody, a treatment for an inherited form of amyotrophic lateral sclerosis, or ALS. READ MORE
by Ned Pagliarulo
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