BioPharma Credit’s manager Pharmakon Advisors notes the announcement released Friday 28 July by Biogen Inc. regarding its definitive agreement to buy Reata Pharmaceuticals Inc. The purchase price equates to an enterprise value of approximately US$7.3bn. Biogen and Reata currently anticipate that this transaction will close in the fourth quarter of 2023.
On 11 May 2023, BioPharma Credit announced an investment in a senior secured loan to Reata of up to $137.5m in up to four tranches. As of today, the company had funded the first two tranches representing a $62.5m investment.
The loan is expected to be prepaid upon the closing of the transaction. Under the terms of the senior secured loan agreement, in addition to the repayment of outstanding principal of that loan, the company is expected to receive a make-whole payment for the remainder of the two-year make-whole period along with a prepayment premium of 3%, in each case with respect to the principal repaid.
For illustrative purposes, if the transaction were to close on 30 September 2023, the company would be expected to receive approximately $15.5m in prepayment and make-whole fees [that implies about a 25% return on the $62.5m invested in just a few months!]
BPCR : BioPharma loan repaid on REATA bid