After cutbacks, Biogen adds new drug with $7.3bn Reata buy

Reata Pharma

Biogen has turned to M&A to offset its recent troubles with pipeline failures and aborted product launches, agreeing to a $7.3 billion deal to acquire Reata Pharma.

The $172.50-per-share cash deal would give it a recently-launched therapy for Friedreich's ataxia (FA) – Skyclarys (omaveloxolone) – which is the first and only FDA-approved treatment for the inherited neurological disease.

It also adds to Biogen's R&D pipeline with an early clinical-stage Hsp90 modulator called cemdomespib for diabetic peripheral neuropathic pain (DPNP) and preclinical Nrf2 activators with potential in inflammatory disorders of the central nervous system.

Skyclarys is the main target of the deal of course, and Biogen's offer comes shortly after Reata resolved an issue in its manufacturing that held up its commercial launch after getting a green light from the FDA in February.

The drug has started to roll out with a list price of $370,000 a year, which Jefferies analysts think could propel US sales to $400 million by the end of the decade, with additional upside if it is also approved in other markets.

An application for Skyclarys has already been filed in Europe, with a decision expected early next year, and its commercial prospects were recently lifted when a potential rival from PTC Therapeutics flamed out in a phase 3 trial.

Friedreich's ataxia is a debilitating neuromuscular disease that results in loss of coordination, weakness and fatigue, with around 5,000 diagnosed patients in the US.

Biogen's new chief executive Chris Viehbacher, who was bought in to turn around the company's fortunes after the disastrous launch of Eisai-partnered Alzheimer's therapy Aduhelm (aducanumab), said the new drug represents "a unique opportunity for Biogen to bolster our near-term growth trajectory," adding that Skyclarys is "an excellent complement to our global portfolio of treatments for neuromuscular and rare disease."

Follow-up Alzheimer's drug Leqembi (lecanemab) now has full FDA approval, although Eisai is taking the commercial lead on that product and sales are not expected to ramp up quickly.

Along with Leqembi, Skyclarys would join Qalsody (tofersen), a recently-launched first-in-class therapy for a specific form of amyotrophic lateral sclerosis (ALS), among Biogen's new product launches.

Its pipeline includes UCB-partnered systemic lupus erythematosus (SLE) therapy dapirolizumab pegol as well as Sage Therapeutics-partnered antidepressant zuranolone, although a lack of commentary on the latter in its recent financial update has raised some eyebrows.

The Reata deal has emerged as Biogen is struggling with a multiple sclerosis franchise that is being hit hard by generic competition – with future prospects dented by a recent decision to abandon oral MS drug orelabrutinib and hand rights back to Chinese partner InnoCare – as well as declining sales of spinal muscular atrophy (SMA) therapy Spinraza (nusinersen) due to competition from newer therapies.

Earlier this week, the biotech announced another big round of layoffs and cost-cutting, with 1,000 more workers set to lose their jobs after it shed around 900 last year and shelved various R&D programmes.

Biogen said it expects the Reata takeover to close before the end of the year.