Reata’s Acquisition to Propel Biogen’s Growth Strategy

Biogen Inc. (NASDAQ: BIIB) and Reata Pharmaceuticals, Inc. (NASDAQ: RETA) have announced a definitive agreement on July 28, 2023, for Biogen to acquire Reata at $172.50 per share in cash. The transaction, with an enterprise value of approximately $7.3 billion, signifies a critical move in Biogen’s strategy for sustainable growth, particularly in addressing areas of high unmet medical needs.

Reata’s SKYCLARYS® Amplifies Biogen’s Offerings

The highlight of the acquisition is Reata’s SKYCLARYS® (omaveloxolone), recently approved in the US as the only treatment indicated for patients with Friedreich’s ataxia (FA). This drug fortifies Biogen’s portfolio, with its commercial launch already in progress and European regulatory review ongoing. Besides SKYCLARYS®, Reata has been working on developing innovative therapeutics that regulate cellular metabolism and inflammation in severe neurological diseases, all of which will be absorbed into Biogen’s fold.

Biogen’s Expanded Impact on Rare Disease Treatment

Christopher Viehbacher, Biogen’s President and CEO, believes this acquisition accelerates Biogen’s growth trajectory and sees SKYCLARYS® as an excellent addition to their global treatments for neuromuscular and rare diseases. Warren Huff, Chairman and CEO of Reata, endorses Biogen’s understanding of the rare disease patient journey and believes Biogen will establish SKYCLARYS® as the standard of care for this debilitating genetic condition.

Financial Implications of the Acquisition

This transaction is expected to be slightly dilutive to Biogen’s Non-GAAP diluted Earnings Per Share (EPS) in 2023, approximately neutral in 2024, and significantly accretive from 2025 onward, inclusive of related transaction costs. Biogen plans to finance this acquisition using cash reserves, supplemented by term debt issuance. It will be accounted for as a business combination and is expected to close in the fourth quarter of 2023, subject to customary closing conditions, Reata stockholders’ approval, and necessary regulatory approvals.

What Lies Ahead for Biogen

The inclusion of Reata into its fold is predicted to significantly boost Biogen’s Non-GAAP diluted EPS from 2025. Furthermore, Biogen’s Full Year 2023 Financial Guidance is set to be updated in sync with its third quarter 2023 earnings release. In the meantime, Biogen has secured voting and support agreements with certain Reata stockholders, representing around 36% of the voting power of Reata’s common stock.

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