2023-07-28 12:49:08 ET
Shares of Reata Pharmaceuticals Inc ( NASDAQ: RETA ) opened more than 50% up this morning after Biogen Inc ( NASDAQ: BIIB ) said it will buy the pharma company for $7.3 billion.
Why is Biogen making this acquisition?
The all-cash agreement values each share of Reata Pharmaceuticals at $172.50.
Biogen is convinced that the said acquisition will help expand its footprint in treatments for rare diseases. In the press release , its CEO Christopher Viehbacher said:
This is a unique opportunity to bolster our near-term growth trajectory, and SKYCLARYS is an excellent complement to our global portfolio of treatments for neuromuscular and rare diseases.
The news arrives only days after Biogen reported strong results for its fiscal second quarter and revealed plans of lowering its headcount by about 11%. The biotech stock is also in the green today.
Biogen will get to boost its adjusted EPS
The announced transaction is expected to complete in the fourth quarter of this year provided that it meets the customary closing conditions, including shareholders’ and regulatory approvals.
Biogen expects the buyout to help materially increase its adjusted earnings per share beginning in 2025. According to Warren Huff – the Chief Executive of Reata Pharmaceuticals:
With clear understanding of rare disease patient journey and existing commercial infrastructure, Biogen will establish SKYCLARYS as the standard of care in treatment of a devastating genetic disease.
Biogen will primarily use cash on hand but will also issue term debt to fund the agreement. Earlier this month, the U.S. Food and Drug Administration fully approved its Alzheimer’s drug – Leqembi ( read more ).
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