Biogen Makes Gene Therapy Splash as Street Wonders What's Next

(Bloomberg) -- Biogen Inc.’s plan to buy gene therapy developer Nightstar Therapeutics Plc brings a much needed deal to help diversify away from its high-risk Alzheimer’s drugs, but the pact left some on Wall Street craving more.

The $877 million deal is in-line with management’s promise to diversify its drug portfolio with later-stage assets and take some of the risk off next year’s closely watched catalyst -- late-stage data for the Alzheimer’s treatment aducanumab. Analysts including Jefferies’s Michael Yee said Biogen still needs to do more to move the needle.

“Investors have wanted Biogen to do a lot more to de-risk Alzheimer’s and the big data in 2020,” Yee wrote in a note to clients. “Biogen bulls want the company to buy late-stage neuro assets such as in DMD, depression, or in other much bigger markets that will move the needle sooner on a $65B market cap company.”

Shares of the Cambridge, Massachusetts-based drugmaker fell 0.2 percent at 10:45 a.m. in New York. Nightstar jumped 66 percent to $25.18, just shy of the $25.50-a-share offer.

The acquisition comes just a week after Roche Holding AG made a $4.8 billion bid for Spark Therapeutics Inc. Nightstar’s pipeline includes a pair of late-stage treatment candidates for rare inherited retinal diseases. Biogen’s portfolio is mostly focused in neuroscience.

“While today’s deal doesn’t quite address Biogen’s critical need for transformative business development, we are positive on the acquisition,” Barclays analyst Geoff Meacham wrote. He is keeping a neutral outlook on the company until there’s more clarity on the pipeline.

To contact the reporter on this story: Bailey Lipschultz in New York at blipschultz@bloomberg.net

To contact the editor responsible for this story: Catherine Larkin at clarkin4@bloomberg.net

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