Biogen Acquires HI-Bio for $1.15B

Biogen is acquiring Human Immunology Biosciences (HI-Bio), an immunology startup, in an effort to diversify its product pipeline, which is predominantly known for neurology treatments. The acquisition deal includes a $1.15 billion upfront cash payment, with an additional $650 million contingent on the achievement of certain milestones by HI-Bio’s leading drug, felzartamab. Felzartamab has already completed Phase 2 trials for two kidney conditions, with ongoing studies for a third condition.

Biogen has stated that this acquisition will not impact its financial guidance for 2024. The company plans to finance the deal using its existing cash reserves and may also use a revolving credit agreement. The transaction is expected to close in the third quarter.

The acquisition is seen by analysts as a strategic move to reduce the overall risk in Biogen’s pipeline. Christopher Raymond, an analyst at Piper Sandler, highlighted that felzartamab shows promise and is slated for Phase 3 research. This acquisition addresses a long-standing strategic issue for Biogen, which has been heavily focused on the high-risk area of neurology.

Biogen has faced challenges in recent years, particularly with stagnant sales due to rising competition in its multiple sclerosis segment and setbacks with new products, such as the Alzheimer’s drug Aduhelm. Aduhelm, once anticipated to be a major success, received a controversial approval but failed commercially, leading Biogen to abandon the product earlier this year.

Biogen's neurology pipeline has yielded mixed results. While the company gained approval for a new ALS treatment, Qalsody, in April last year, it discontinued another ALS drug after discouraging trial outcomes. However, Biogen has seen promising growth with its new Alzheimer’s treatment, Leqembi, which has attracted further investment.

CEO Chris Viehbacher, who joined Biogen in 2022, has been steering the company beyond its traditional neurology focus to rejuvenate its growth. Since his appointment, Viehbacher has hired a new head of research and led a significant $7.3 billion acquisition of Reata Pharmaceuticals, a company specializing in rare diseases.

The acquisition of HI-Bio aligns with Viehbacher’s strategy to expand Biogen’s footprint in immunology. HI-Bio, supported by Arch Venture Partners and Monograph Capital, has licensed felzartamab and another drug, HIB210, from the German company MorphoSys, which is currently being acquired by Novartis. HIB210 is in Phase 1 trials and holds potential for treating a variety of immune-mediated diseases.

Felzartamab has completed Phase 2 trials for primary membranous nephropathy and antibody-mediated rejection in kidney transplant patients, with ongoing studies for IgA nephropathy. Biogen announced that HI-Bio plans to advance all three indications to Phase 3 trials.

This strategic acquisition by Biogen is seen as a move to mitigate risks and diversify its portfolio, indicating a shift from its traditional focus on neurology to include promising opportunities in immunology.