Biogen-Nightstar deal sheds light on gene therapy feeding frenzy

The level of interest in gene therapies has been laid bare by a report on Biogen’s pursuit of Nightstar Therapeutics. Biogen ultimately landed its target with an $877 million (€772 million) all-cash offer but only after seeing off interest from three other companies.

Writing in a regulatory filing (PDF) about the deal, Nightstar set out the multiyear process that led to the takeover. Biogen and two of its rivals for Nightstar began talking to the startup about partnering back before its IPO in 2017. Those talks stepped up over the back half of last year as Biogen’s three rivals expressed an interest in Nightstar’s pipeline prospects and manufacturing capabilities. 

Biogen is largely absent from that part of the story. That changed in December when a $20.50 a share bid from Company B led Nightstar to contact Biogen and the two other potential acquirers to gauge their interest in its business. 

Company B expressed a “high degree of interest” in buying Nightstar and a desire to “move quickly to complete a transaction” in the days before Christmas. Nightstar sought to move the process along by asking the companies to submit indications of interest in mid-January, but the deadline passed with the potential buyers asking for more time.

Biogen made its move at the end of January, offering $19 to $21 a share to buy Nightstar. That offer was dismissed as being “well below the standalone value of the business.”

At that point, Nightstar had three other potential buyers lined up but the situation changed quickly in February.

All three of Biogen’s rivals pulled out of the race to buy Nightstar within two days of each other, although two of the companies expressed an interest in forming a partnership. Nightstar advanced talks about the strategic partnerships and later sought to use them as leverage when Biogen made a second bid. Biogen offered $25 a share but was rejected, with Nightstar arguing that “remaining independent or entering into a strategic collaboration agreement remained viable options.”

Nightstar was pushing Biogen to offer $26.50, but ultimately accepted a modest increase on the second bid. The gene therapy specialist accepted a $25.50 bid the day before the deal was disclosed to the public in the first week of March.

The materials filed by Nightstar feature projections of what return Biogen could generate on the investment. At the upper end, Nightstar foresees pulling in revenues of $1.2 billion in 2025, most of which will be realized as profits. The low-end forecast tops out at $415 million, although that could prove to be optimistic if Nightstar comes unstuck in the clinic.