Reata's Acquisition Fits Biogen's Strategy Despite High Cost: Analyst Says High Level Regulatory Scrutiny Not Anticipated

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

William Blair analysts Myles Minter, Sarah Schram and Tiffany Marchell view the acquisition, although not inexpensive, as fitting the company's previously described acquisition goals of de-risked, value-added and accretive assets. 

The analysts say the asset and other pipeline Nrf2 activators fit well within the company's rare neurology franchise.

William Blair also acknowledged potential competition over the longer term from other clinical-stage programs, including Larimar Therapeutics Inc LRMR, Design Therapeutics Inc DSGN and earlier-stage programs like Solid Biosciences Inc SLDB.

Biogen had previously indicated its capacity to allocate approximately $10 billion for corporate acquisitions. If the deal is successfully finalized in the fourth quarter, it would consume the majority of these funds, raising the question of whether there is any capacity left for another transaction.

From the perspective of potential issues with the Federal Trade Commission (FTC), there is currently no direct pipeline overlap in Friedreich's Ataxia (FA), but Biogen is a significant player in the neuro-rare disease market. 

The analysts do not anticipate the same level of scrutiny as was seen in the Horizon Therapeutics HZNP/Amgen, Inc. AMGN and Pfizer Inc. PFE/Seagen Inc SGEN merger proceedings.

BIIB Price Action: Biogen shares are up 1.02% at $265.48 on the last check Friday.

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