WSJ's write-up of the Pfizer acquisition of ARNA. Interesting ARNA's drug is expected to bring in $900 mm of revenue by 2026. ARNA's stock declined 35% this year.
Pfizer Inc. PFE +3.98% agreed to acquire Arena Pharmaceuticals Inc. ARNA +81.03% for $6.7 billion, bolstering the pharmaceutical giant’s pipeline of medicines for inflammatory bowel diseases.
Pfizer will pay Arena shareholders $100 per share, double Arena’s share price of $49.94 through Friday’s close. The stock had fallen 35% so far this year before the Pfizer acquisition was announced.
Pfizer will gain Arena’s lead drug, etrasimod, a pill in late-stage studies in ulcerative colitis; results are expected in the first quarter of next year, according to analysts. Data from a midstage study in Crohn’s disease are expected in the second quarter of 2022. The drug could have global ulcerative colitis sales of $900 million by 2026, BMO Capital Markets said in a note to clients.
“We plan to accelerate the clinical development of etrasimod for patients with immuno-inflammatory diseases,” said Mike Gladstone, Pfizer’s global president for inflammation and immunology.
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If approved, Arena’s etrasimod would compete with Bristol-Myers Squibb & Co.’s Zeposia, a pill with a similar biological function targeting immune cell receptors. Zeposia was approved in May for ulcerative colitis by the Food and Drug Administration. Global Zeposia sales are forecast to reach $2.9 billion in 2025, according to SVB Leerink, an investment bank.
There are about a quarter-million ulcerative colitis patients in the U.S. receiving treatment, according to Leerink. More than half of patients take drugs to block an inflammatory protein called tumor necrosis factor, such as AbbVie Inc.’s Humira.
Pfizer’s Xeljanz, which targets a different inflammatory protein, had $500 million in 2020 sales from patients with ulcerative colitis or Crohn’s disease, according to Leerink. Xeljanz had $2.44 billion in global sales last year.
Arena, based in Park City, Utah, has reinvented itself in recent years after an anti-obesity drug it developed flopped in the marketplace. After selling rights to the drug, Belviq, to Eisai Co. in 2017, Arena assembled a new pipeline aimed at inflammatory diseases such as Crohn’s disease and eczema. Eisai pulled the drug off the market early last year because of safety risks.
Analysts say the deal could be the first of many for Pfizer, which had $27.7 billion in cash and short-term investments at the beginning of October. The company’s revenue more than doubled in the third quarter, with the biggest contribution coming from $13 billion in sales of its Covid-19 vaccine.
BMO Capital Markets analyst Evan Seigerman said in a note to clients on Monday that Pfizer has the ability to do $132 billion in deals through 2022. “We see this as the first of many deals for Pfizer,” he said. “Pfizer is making good use of the deluge of cash from Covid-19 vaccines/boosters to further bolster its pipeline.”
The deal is expected to close in the first half of 2022, pending regulatory approvals.
Write to Joseph Walker at joseph.walker@wsj.com
