Arena Pharmaceuticals Snags $800 Million from United Therapeutics for a Phase III PAH Drug

X-ray animation of human chest, with heart highlighted

Shares of Arena Pharmaceuticals have rocketed more than 28 percent this morning after it signed a licensing agreement with United Therapeutics Corporation for a late-stage drug candidate. The deal could be worth more than $1.2 billion for Arena.

San Diego-based Arena will receive an $800 million upfront payment and could snag another $400 million in milestone payments plus potential low double-digit tiered royalties for ralinepag, a next-generation, oral, selective and potent prostacyclin receptor agonist in development for the treatment of pulmonary arterial hypertension (PAH). Ralinepag is currently in Phase III development. United Therapeutics, based in North Carolina, will receive exclusive, worldwide rights to ralinepag.

With the massive upfront payment, United Therapeutics is banking on the potential therapy for PAH, a disease that is often idiopathic and most commonly affects young women. Pulmonary arterial hypertension is high blood pressure in the lungs. PAH occurs when the very small arteries throughout the lungs narrow in diameter, which increases the resistance to blood flow through the lungs. Over time, the increased blood pressure can damage the heart. Without treatment, most patients die within five years. The average 29-year-old woman diagnosed with PAH typically does not live to see the age of 40, even with current medications.

Ralinepag (APD811) is a next-generation, oral, selective potent, once-daily IP receptor agonist. Ralinepag's potency on vasodilation, inhibition of proliferation of vascular smooth muscle cells, and inhibition of platelet aggregation, combined with an extended half-life, support its application as a potentially best-in-class agent for the treatment of PAH, according to data provided by Arena.

Amit D. Munshi, president and chief executive officer of Arena, said the company believes ralinepag has the potential to transform the treatment of PAH. That is something that United Therapeutics believes as well. Martine Rothblatt, chairman and CEO of United Therapeutics, said the company has conducted “extensive due diligence” on ralinepag. Rothblatt said the company has been impressed by the clinical development plan and coordination with the U.S. Food and Drug Administration undertaken by Arena.

“We are confident that after achieving FDA approval via at least one of its several different potential regulatory pathways to success, this product will help greater than 10,000 patients annually from the 2020s and well into the 2030s, while complementing our existing portfolio of PAH therapies,” Rothblatt said in a statement.

Munshi said the deal with United Therapeutics represents a significant milestone in the development of ralinepag” He said the finances will strategically position Arena to “aggressively advance our best-in-class pipeline, anchored by etrasimod and olorinab, with the focus and resources essential for long-term success." Etrasimod is being evaluated in later-stage clinical programs in ulcerative colitis (UC) and Crohn's disease, as well as progressing programs for primary biliary cholangitis and atopic dermatitis. Olorinab is a Phase II drug candidate for gastrointestinal pain.

Shares of Arena hit a morning high of $42.26. The stock closed Wednesday at $32.52 per share. Shares of United Therapeutics are up more than 5 percent to $117.25 this morning.

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