Each week, Pharmaceutical Technology’s editors select a deal that illustrates the themes driving change in our sector. The deal may not always be the largest in value, or the highest profile. But we select it because of what it tells us about where the leading companies are focusing their efforts, and why. We pick apart the deal itself, and the industry theme behind it. This new, thematic deal coverage is driven by our underlying Disruptor data which tracks all major deals, patents, company filings, hiring patterns and social media buzz across our sectors.  

The deal

After months of mixed news with its Alzheimer’s disease portfolio, Biogen made headlines with its plans to acquire Reata Pharmaceuticals for $7.3bn. Since the news broke on 28 July, the company’s stock has been riding a positive wave having risen by 3.3%. Biogen’s market cap is $39.3bn.

Why it matters

Reata’s pipeline boasts of several drugs targeting neurological disorders, including Skyclarys (omaveloxolone), which is approved for treating the neuromuscular condition Friedreich’s Ataxia. In its announcement on the acquisition, Biogen highlighted Skyclarys, the only US Food and Drug Administration (FDA)-approved treatment for Friedreich’s Ataxia, as a complementary product to its pipeline that addresses an unmet need. In the last few years, Biogen has made major strides with its neurology-focused products, having pushed two Alzheimer’s disease drugs past the approval line, namely Aduhelm (aducanumab), and Leqembi, which it developed with Eisai. But facilitating payment for these drugs through government agencies has been challenging.

Last year, the Centers for Medicare and Medicaid Services (CMS) announced it would only cover the reimbursement of antibodies for Alzheimer’s disease that have received a full traditional approval. This limited the coverage for Aduhelm and Leqembi, both of which received expedited accelerated approvals.  In July, the FDA granted Leqembi a full traditional approval, thereby allowing it to be reimbursed more widely.

The Reata acquisition comes at a time when Biogen’s competition in the Alzheimer’s disease space is only expected to increase. Eli Lilly’s donanemab has grabbed attention with encouraging Phase III data, and the company expects word from the FDA on a traditional approval, having finished an application last quarter. Biogen expects the acquisition of Reata’s portfolio to be “significantly accretive” to its non-GAAP diluted earnings per share from 2025 onwards.