A biotech company Plano is turning the regulatory approval of its first commercial drug into an even bigger deal.
Massachusetts-based Biogen Inc. announced Friday that it is buying Reata Pharmaceuticals in a cash deal that values the North Texas-founded company at $7.3 billion. Biogen is paying $172.50 per share — a nearly 59% premium over where they closed before the deal went public.
A month ago, Reata received final approval from the US Food and Drug Administration to begin marketing Skyclarys, described as the first approved treatment for the extremely rare neuromuscular disease Friedreich’s ataxia. The drug was years in the making.
Friedreich’s ataxia is a hereditary neurodegenerative disorder that affects approximately 5,000 patients in the US. The disease is usually diagnosed in adolescence and causes progressive loss of muscle strength and coordination, usually resulting in wheelchair disability and can shorten life.
In studies, the company said patients taking Skyclarys “showed significantly less disability over time.” The drug is currently approved to treat adults and adolescents ages 16 and older in the US. Regulatory review is also underway in Europe.
Skyclarys is Reata’s first drug approval since its inception in 2002, when it emerged from research at UT Southwestern Medical Center. The approval came shortly after the company suffered a setback from another drug in its pipeline — a drug for chronic kidney disease that failed to show significant long-term effectiveness in patients.
For Cambridge, Massachusetts-based Biogen, which saw its annual revenue fall from $14.3 billion in 2019 to $10.1 billion last year, the acquisition is expected to significantly boost revenue by 2025. William Blair analyst Myles Minter said Skyclarys’ global sales are expected to reach $1.5 billion by 2030.
The deal should be completed by the end of this year.
“This is a unique opportunity for Biogen to strengthen our near-term growth trajectory,” Biogen CEO Christopher Viehbacher said in a statement.
It couldn’t have come at a better time for Biogen. Earlier this week, the company said it will lay off 1,000 workers — about 11% of its workforce — by the end of 2024 as part of a cost-cutting program it dubbed “Fit for Growth.”
Reata planned to launch Skyclarys at a cost of $370,000 per year. CEO Warren Huff previously said the drug had seen “strong initial demand” and that the company estimated it would sign up about 4,500 patients.
“Biogen’s expertise and commercial footprint make it the optimal choice to help Skyclarys realize its full potential,” Huff said in a statement Friday. “With its clear understanding of the rare disease patient journey and existing commercial infrastructure, we believe Biogen will establish Skyclarys as the standard of care in the treatment of this devastating genetic disease.”
Founded in 1978, Biogen has developed drugs to treat diseases such as multiple sclerosis and spinal muscular atrophy and has co-developed treatments for Alzheimer’s disease.
On a conference call to discuss the deal, Viehbacher said the acquisition of Reata allows the company to broaden its horizons.
“This gives us another growth engine, which I can’t say how important it is internally,” he said. “This is a substantial cultural change within the company. It makes us more agile, focused and responsible to capitalize on the growth engines ahead.”
Reata recently made plans to move into a custom office tower in Legacy West, but the companies have not specified how the deal will impact employees. A Biogen representative said it’s premature to speculate until the deal is finalized.
Reata started this year with 321 full-time and two part-time employees. More than two-thirds work in research and development.
Hubert Zajicek, chief executive and co-founder of Health Wildcatters and one of North Texas’ leading biotech attorneys, said he thinks Biogen has an opportunity to grow in the state.
“Regionally, we hope that Reata’s staff will not all move and that there will be a significant presence here,” said Zajicek. “I would like to see Biogen consider strengthening a presence in Texas. It is a good time to consider that move for any pharmaceutical or medical device company.”
The commercial launch of Reata provided a significant boost to community leaders’ efforts to establish Dallas-Fort Worth as a major life sciences center. They are aggressively pushing the region as a location for the Advanced Research Projects Agency for Health, or ARPA-H, an ambitious venture by the Biden administration to accelerate biomedical and health research with $1 billion in funding.
D-FW already claims more than 60 biotech and life sciences companies and several leading research universities. Formerly home to Mobil Corp., the sprawling 23-acre Pegasus Park campus in Dallas features a biotech-specific hub anchored by BioLabs, a coworking lab space company designed to help launch and expand other emerging companies.
Other recent wins by North Texas companies include a $47 million capital raise by Southlake’s Renibus Therapeutics to advance its drug to reduce complications after cardiothoracic surgery through Phase 3 trials and Dallas-based Lantern Pharma’s experimental cancer drug that has won FDA approval to begin human trials.
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