Biogen to Acquire Reata Pharmaceuticals in Big Pharma Mega-Merger
Key takeaways
- Biogen has announced plans to buy Reata Pharmaceuticals for $7.3 billion
- The deal would add the new drug Skyclarys to Biogen’s portfolio, which treats a rare neurological disorder and has massive sales potential
- Biogen shares were flat at the news, but Reata shares skyrocketed close to 50%
As the economic turbulence dies down somewhat, we’re starting to see M&A activity pick up — and the latest news is from Biogen, which has announced its intention to take over Reata Pharmaceuticals and add the company’s groundbreaking new drug to its roster. Wall Street was enamored with Reata but left Biogen’s stock out in the cold. Here’s the latest.
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What’s the latest with Biogen?
When Biogen CEO Chris Viehbacher said the company had a casual $7.3 billion to drop on M&A, rumors started to swirl. Just days later, Biogen announced it plans to acquire Reata Pharmaceuticals for… $7.3 billion.
The purchase is apparently agreed for $172.50 a share, which is a massive 59% markup on Reata’s stock price. From the deal, Biogen would gain Skyclarys, which is the first-of-its-kind treatment for a rare neurological disorder called Friedreich’s ataxia. The sales potential for the new drug, which was approved by the FDA this year, is projected at $1.5 billion by 2030.
The Skyclarys drug fits in well with Biogen’s existing portfolio, which includes Spinraza for spinal muscular atrophy and Qalsody for ALS. Biogen expects the acquisition to contribute to its earnings beats from 2025.
What was the market reaction?
Biogen’s share price remained flat at the news — the stock has only gained 0.17% in five days and has actually lost 5.8% in the last month. It’s a sign that investors are still skeptical the deal will pass through the usual regulatory hurdles, continued unease about the slow uptake of Biogen’s new Alzheimer’s drug and the news it’s laying off 1,000 employees.
The best was yet to come for existing Reata Pharmaceuticals investors, who have seen a massive 50% increase in the stock in the last five days after it was confirmed that Biogen would be buying the company with such a hefty premium.
The bottom line
Should the deal go ahead, it could be an incredible purchase for flagging Biogen. It’s also a sign CEO Viehbacher, who is relatively new to the role, is keen to make his mark. But Wall Street still wasn’t convinced, so it could be a while until Biogen’s stock prices in the good news.
Wall Street shrugging off Biogen’s big news is symptomatic of a broader malaise in healthcare stocks — and a reminder not to put all your eggs in one basket. Diversify with Q.ai’s Value Vault Kit, which curates companies with solid financial stability and modest valuations with the help of AI.
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