Biogen is spending more than seven billion US dollars (£5.4 billion) to buy Reata Pharmaceuticals and bolster its rare disease treatments.
The Alzheimer’s treatment developer said on Friday it will pay 172.50 dollars (£134.08) in cash for each share of Reata in a deal it expects to close by the end of this year.
Texas-based Reata focuses on developing treatments that regulate cellular metabolism and deal with inflammation in serious neurologic diseases.
It makes Skyclarys, a Food and Drug Administration-approved treatment for the neurologic disorder Friedreich’s ataxia.
Biogen puts an enterprise value of 7.3 billion dollars (£5.7 billion) on the acquisition.
Regulators and Reata shareholders need to approve the deal.
Biogen makes the multiple sclerosis treatments Techfidera and Tysabri as well as the spinal muscular atrophy treatment Spinraza.
It is also partnering with Japanese drugmaker Eisai to sell the new Alzheimer’s treatment Leqembi.
Chief executive Christopher Viehbacher said in a statement the company’s experience developing and selling rare disease treatments will help expand the market for Skyclarys, which is being reviewed by European regulators.
Friedreich’s ataxia is caused by a gene defect inherited from both parents, according to Johns Hopkins Medicine.
It can lead to vision and hearing loss and trouble walking, among other symptoms.
Mr Viehbacher has been focused on cutting costs at Biogen and developing the company’s pipeline of potential drugs since he became chief executive last November.
Biogen has been dealing with sliding sales for its multiple sclerosis treatments and the failed launch of its Alzheimer’s treatment Aduhelm.
Mr Viehbacher said on Tuesday, after the company reported better-than-expected second quarter results, that Biogen is “laser focused” on changing the company’s share price trajectory.
“As I’ve heard from so many investors, our share price hasn’t really moved in 10 years, so that’s where we are focused on really driving … shareholder value,” he said.
“And that means allocating capital in a way that’s commensurate with that.”
Shares of Reata Pharmaceuticals jumped 13% to 123 dollars (£95.60) in pre-market trading on Friday.
Biogen’s stock slipped 1%.
