Biogen Inc. is exploring an acquisition of Reata Pharmaceuticals Inc., according to people familiar with the matter, in a move that would potentially expand the biotech company’s rare disease treatments.
(Bloomberg) — Biogen Inc. is exploring an acquisition of Reata Pharmaceuticals Inc., according to people familiar with the matter, in a move that would potentially expand the biotech company’s rare disease treatments.
Cambridge, Massachusetts-based Biogen has been speaking to advisers about a possible purchase of the company, the people said, asking not to be identified because the information is private. Reata, which is also speaking to advisers, may attract interest from other suitors, according to the people.
Shares of Reata have nearly tripled this year, giving the company a market value of about $4.1 billion at Thursday’s close. They jumped as much as 15% in pre-market US trading Friday.
No final decisions have been made, and there’s no certainty the deliberations will lead to a transaction, the people said. Reata could opt to remain independent or pursue a partnership instead of an outright sale, some of the people said.
The Betaville blog wrote on Thursday about market speculation that Reata had attracted takeover interest. Representatives for Biogen and Reata didn’t respond to requests for comment.
Biogen is in transition as it attempts to broaden its focus and come up with new growth sources to replace aging multiple sclerosis drugs. Chief Executive Officer Christopher Viehbacher, who took over last year, has promised to redesign the company and reduce its dependence on risky neurology research without eliminating the ability to pursue hard diseases like Alzheimer’s. Viehbacher has highlighted rare disease as an area the company wants to expand in.
Declining Sales
Reata, based in Plano, Texas, develops drugs that target chronic and genetic neurological conditions. It received US Food and Drug Administration approval in February for Skyclarys, the first approved treatment for Friedreich’s ataxia, a rare inherited disease that can affect children as young as five and causes impaired walking and coordination.
The treatment could generate peak sales of $1.5 billion, according to Barclays Plc forecasts. A sale to a larger pharmaceutical company would give Reata more resources to successfully roll the drug out to patients.
Biogen hasn’t been the most acquisitive company over the years. In 2013, it bought the remaining stake in the multiple sclerosis medicine Tysabri for $3.25 billion in cash from its partner Elan Corp. In 2020, it acquired a minority stake in Sage Therapeutics Inc. for about $1.5 billion. Biogen’s shares have fallen about 5% this year, giving it a market value of around $38 billion.
Earlier this week, Biogen said it would cut 1,000 jobs, or more than 11% of its workforce, and reduce operating expenses in an attempt to grapple with declining sales from treatment for multiple sclerosis, its biggest drug category.
Biogen received FDA approval earlier this year for its drug Qalsody to treat a rare form of amyotrophic lateral sclerosis, sometimes called Lou Gehrig’s disease, which destroys nerve cells that control voluntary muscle movement including breathing.
(Updates with pre-market move in third paragraph)
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