USA—Biogen Inc. and Reata Pharmaceuticals, Inc., have announced that they have reached a definitive agreement where Biogen has agreed to acquire Reata for $172.50 per share in cash, reflecting an enterprise value of approximately US$7.3 billion.
Reata is a global biopharmaceutical company that has been committed to developing and commercializing novel therapeutics for patients with serious or life-threatening diseases with few or no approved therapies.
In recent months, the Texas-based company has made significant advancements in developing therapeutics that regulate cellular metabolism and inflammation in serious neurologic diseases.
Reata’s FDA-approved SKYCLARYS (omaveloxolone) is the first and only approved treatment for Friedreich’s ataxia (FA) in the United States, and European regulators’ review is currently ongoing.
In addition, Reata is developing cemdomespib for the treatment of patients with diabetic neuropathic pain.
Although, cemdomespib is undergoing clinical trials as its safety and efficacy are being established by the American Food and Drug Administration (FDA).
Christopher Viehbacher, Biogen’s President, and Chief Executive Officer said, “With extensive expertise in rare disease product development and global commercialization, as demonstrated by SPINRAZA and the recent launch of QALSODY, we believe Biogen has the foundation in place to accelerate the delivery of SKYCLARYS to patients around the world.”
Viehbacher explained that the deal was a unique opportunity for Biogen to bolster its near-term growth trajectory, and SKYCLARYS was an excellent complement to its global portfolio of treatments for neuromuscular and rare diseases.
On his part, Warren Huff, Chairman, and Chief Executive Officer of Reata said that Biogen’s expertise and commercial footprint made it the optimal choice to help SKYCLARYS realize its full potential.
“With its clear understanding of the rare disease patient journey and existing commercial infrastructure, we believe Biogen will establish SKYCLARYS as the standard of care in the treatment of this devastating genetic disease,” Huff reiterated.
A breakdown of the purchase agreement
According to a statement by Biogen, the transaction was approved by the boards of directors of both companies and is currently anticipated to close in the fourth quarter of 2023.
Moreover, Biogen expects the US acquisition to be accounted for as a business combination and the pharmaceutical company expects to finance the acquisition with cash on hand, supplemented by the issuance of term debt.
Correspondingly, the acquisition of Reata is expected to be slightly dilutive to Biogen’s Non-GAAP diluted Earnings Per Share (EPS) in 2023, roughly neutral in 2024, and significantly accretive beginning in 2025, inclusive of associated transaction costs.
Furthermore, Biogen plans to update its Full Year 2023 Financial Guidance in conjunction with its third-quarter 2023 earnings release.
The transaction is still subject to customary closing conditions, including approval by Reata stockholders and the receipt of necessary regulatory approvals.
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.
Getting to the heart of the purchase
Biogen had made it very clear that the gist of the purchase was pegged on the success of Reata’s SKYCLARYS® (omaveloxolone).
The drug is an oral, once-daily medication indicated for the treatment of Friedreich’s ataxia in adults and adolescents aged 16 years and older in the U.S.
Additionally, the company’s Marketing Authorization Application for omaveloxolone is under review in Europe by the European Medicines Agency (EMA).
Moreover, the European Commission has granted Orphan Drug designation in Europe to omaveloxolone for the treatment of Friedreich’s ataxia.
Friedreich’s ataxia is an ultra-rare, genetic, life-shortening, debilitating, and degenerative neuromuscular disorder typically caused by a trinucleotide repeat expansion in the first intron of the frataxin gene, which encodes the mitochondrial protein frataxin.
Patients with Friedreich’s ataxia typically experience symptoms in childhood, including progressive loss of coordination, muscle weakness, and fatigue that commonly results in motor incapacitation with patients requiring a wheelchair in their 20s.
It is estimated that there are approximately 5,000 patients diagnosed with Friedreich’s ataxia in the U.S.
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