Biogen Bolsters Rare Disease Portfolio, Agrees To Buy Reata Pharmaceuticals With Enterprise Value Of $7.3B

Biogen Inc BIIB has agreed to acquire Reata Pharmaceuticals Inc RETA for $172.50 per share in cash, reflecting an enterprise value of approximately $7.3 billion.

Reata's FDA-approved Skyclarys (omaveloxolone) is the first and only approved treatment for Friedreich's ataxia (FA) in the U.S., with a commercial launch and a European regulatory review ongoing. 

In addition, Reata is developing a portfolio of products for a range of neurological diseases.

Recently, Biogen released its Q2 earnings and said the new "Fit for Growth" program is expected to generate approximately $1 billion in gross operating expense savings.

"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," said Christopher Viehbacher, Biogen's President & CEO.

The transaction is currently anticipated to close in the fourth quarter of 2023. 

The acquisition of Reata is expected to be slightly dilutive to Biogen's Non-GAAP diluted EPS in 2023, roughly neutral in 2024, and significantly accretive beginning in 2025, including associated transaction costs.

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

As of June 30, 2023, Biogen had cash, cash equivalents, and marketable securities around $7.3 billion and $6.3 billion in total debt.

Biogen has entered into voting and support agreements with certain stockholders of Reata, representing approximately 36% of the voting power of Reata's common stock.

Price Action: RETA shares are up 51.8% at $164.80, and BIIB stock is up 1.22% at $266.00 during the premarket session on the last check Friday.

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