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Biogen to Acquire Gene-Therapy Company Nightstar for $800M

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Biogen BIIB announced that it has entered into an agreement to acquire London based clinical-stage gene-therapy company, Nightstar Therapeutics NITE.

Shares of Nightstar gained 66% on the news, while Biogen shares lost 2%.

Biogen’s shares have plunged 5.6% in the past six months compared with the industry’s decline of 12.3%.


Financial Terms of the Agreement

Per the agreement, Biogen will pay $25.50 in cash for each share of Nightstar or approximately $800 million on a fully-diluted basis.

Biogen expects to complete the acquisition by mid-2019. 

Strategic Implications

Nightstar is focused on adeno-associated virus (AAV) treatments for inherited retinal disorders. The company has two potentially first-in-class mid- to late-stage candidates as well as other preclinical programs.

The company’s lead asset, NSR-REP1 is being evaluated for the treatment of choroideremia (CHM) in an ongoing phase III STAR trial. Data from the trial is expected in the second half of 2020.

The second candidate is NSR-RPGR, being evaluated for the treatment of X-linked retinitis pigmentosa (XLRP). The phase I/II data from the dose escalation portion of the XIRIUS trial for NSR-RPGR demonstrated an increase in central retinal sensitivity. The phase II/III dose expansion portion of the XIRIUS trial is currently ongoing.

The preclinical pipeline includes NSR-ABCA4 for Stargardt disease, and potential programs targeting Best vitelliform macular dystrophy (Best disease) and other genetic forms of retinitis pigmentosa.

The acquisition is expected to accelerate Biogen’s entry into ophthalmology space.

Our Take

Biogen holds a strong position in the multiple sclerosis (MS) market, with a wide range of products like Avonex, Tysabri, Tecfidera and Plegridy. The Nightstar acquisition will somewhat diversify Biogen’s MS portfolio. Ophthalmology is an emerging growth area, and a potential approval of Nightstar candidates will boost Biogen’s portfolio.

However, shareholders weren’t that impressed and were probably asking for a bigger splash.

This year started with a bang for the biotech industry with the announcement of one of the biggest mergers of the sector, the Bristol Myers and Celgene collaboration. This was followed by a slew of other announcements. Biogen becomes the latest company to join the M&A bandwagon. In particular, gene therapy is a hot area of pursuit for most biotechs, given the potential of the therapy. 

Swiss pharma giant Roche Holdings RHHBY recently announced that it will acquire gene-therapy company Spark Therapeutics ONCE for $4.3 billion.

Zacks Rank

Biogen currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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