Reata will be acquired by Biogen for $6.5 billion to bolster rare illness portfolio.

To increase its position in the market for medications for rare diseases, Biogen announced that it will acquire biotech company Reata Pharmaceuticals for around $6.5 billion.

Through the agreement, Biogen will acquire Reata's recently authorised medication Skyclarys, which is used to treat a rare genetic condition that gradually deteriorates the neurological system. Reata is located in Plano, Texas.

One in 50,000 persons in the US suffer with Friedreich's ataxia, which has just one licenced treatment: Skyclarys.

Reata stock trade was suspended in the lead-up to the open, and Biogen's share price dropped by around 3%.

According to Biogen CEO Christopher Viehbacher, "We believe Biogen has the foundation in place to accelerate the delivery of Skyclarys to patients around the world."

As it seeks to expand its portfolio beyond the Alzheimer's medicine Leqembi, Biogen has stated that it will consider deals in the areas of immunology, neuropsychiatry, and rare disorders.

In cash, the corporation will pay $172.50 per share, a premium of 58.9% over Reata's most recent closing price.

The transaction values Reata at around $7.3 billion, including debt.

In addition to using cash on hand to pay for the purchase, Biogen intends to issue term debt.

(Sources: investing.com, reuters.com)