Pfizer Bets Big on Arena’s Portfolio Including Cannabinoids in $6.7 Billion Deal

NEW YORK–Pfizer Inc (PFE.N) said on Monday it would buy drug developer Arena Pharmaceuticals Inc (ARNA.O) for $6.7 billion in cash, to add a promising treatment candidate that targets diseases affecting the stomach and intestine.The $100 per share offer is double last Friday’s closing price of Arena’s stock.

This is the latest deal Pfizer has struck this year to expand its treatment pipeline. The company last month acquired immuno-oncology company Trillium Therapeutics Inc for about $2.22 billion to strengthen its arsenal of blood cancer therapies.

Monday’s deal will help Pfizer gain access to Arena’s lead candidate, etrasimod, which is being tested in a late-stage trial in ulcerative colitis, as well as in a mid-to-late stage study in Crohn’s disease, both types of inflammatory bowel diseases that cause ulcers in the digestive tract.

Inflammatory bowel disease is a $20 billion market globally, making it a lucrative target for drugmakers.

Earlier this year, the U.S. Food & Drug Administration approved Bristol Myers Squibb’s (BMY.N) Zeposia for ulcerative colitis. But cannabinoids tested better.

“(Etrasimod) has the potential to be best-in-class drug in these indications…could be a multi-billion blockbuster drug in just Crohn’s and ulcerative colitis and we forecast risk adjusted revenue of $3.8 billion,” said Jones Trading analyst Prakhar Agrawal to Reuters.

Arena is also developing a cannabinoid type 2 receptor (CB2) antagonist as it paves the way in cannabinoid research with a focus on visceral pain associated with gastrointestinal disorders.

Arena Pharmaceuticals, based in San Diego is research and development of its investigational drug candidate called Olorinab (APD371). This is an oral full agonist of the cannabinoid receptor 2 that is being researched for the treatment of various gastrointestinal issues.

“This acquisition displays the interest big Pharma is taking in the fast-evolving world of cannabinoids. We are encouraged by the acquisition as it provides more resources and a wider platform for pharmaceutical development of cannabinoids. Overall, this transaction is in line Pfizer’s long-term focus on innovative research and a great win for our investors” said Jones Trading analyst Prakhar Agrawal to Reuters.

The deal is expected to close in the first half of 2022.

This is the latest deal Pfizer has struck this year to expand its treatment pipeline. The company last month acquired immuno-oncology company Trillium Therapeutics Inc for about $2.22 billion to strengthen its arsenal of blood cancer therapies.

Monday’s deal will help Pfizer gain access to Arena’s lead candidate, etrasimod, which is being tested in a late-stage trial in ulcerative colitis, as well as in a mid-to-late stage study in Crohn’s disease, both types of inflammatory bowel diseases that cause ulcers in the digestive tract.

Inflammatory bowel disease is a $20 billion market globally, making it a lucrative target for drugmakers.