Deals

United Therapeutics pays $800M-plus to grab Arena’s PhIII PAH drug

United Therapeutics $UTHR is paying an $800 million cash upfront in a big bet to stay among the leaders in pulmonary arterial hypertension, grabbing rights to Arena Pharmaceuticals’ ralinepag in the deal. And the executive crew is willing to add hundreds of millions more in milestones if they can stay on track through to an approval and commercialization.

United CEO Martine Rothblatt says their 20 years of experience in the field convinced her that they have a winner on their hands.

She noted:

We have conducted extensive due diligence on ralinepag, applying our two decades of knowledge about PAH. 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.

Arena’s shares $ARNA surged about 20% premarket on the news.

The oral drug, which is currently in late-stage development, is expected to compete against Johnson & Johnson’s $JNJ selexipag, which the biopharma giant acquired as part of its $30 billion takeover of Europe’s biotech powerhouse Actelion last year.

Amit Munshi

Arena is eligible to receive potential milestone payments of up to $400 million under the deal, including $150 million upon first marketing approval of ralinepag in a major non-U.S. market, and another $250 million upon U.S. marketing approval of an inhaled formulation of ralinepag. The San Diego-based company is also eligible to receive certain royalties on potential net sales.

The company has undergone a massive reorganization after its gamble on the obesity pill Belviq turned awry as lukewarm sales and adoption of the drug led to a renegotiated agreement with partner Eisai, which acquired the global rights to the diet drug in 2017. In a separate 8-K filing, Arena said that it expects “a significant portion of the taxable gain that would otherwise be triggered by the upfront payment will be offset by Arena’s net operating losses”.

In patients with PAH, the right side of the heart has to work harder to push blood through the lungs, because the pulmonary arteries in the lung are blocked, narrowed or destroyed. This culminates in higher pressure in the right ventricle that pumps blood around the lungs, which over time weakens the ventricle causing symptoms such as shortness of breath, fatigue and chest pain. As the condition worsens, the symptoms may limit all physical activity. Although treatments have been approved to manage the symptoms of the life-threatening condition, PAH remains incurable.

In a mid-stage study reported in July last year, the long-acting ralinepag conferred a statistically significant improvement in pulmonary vascular resistance of nearly 30 percent when compared to the placebo, as well as gains in patients’ ability to exercise. Three Phase III trials are now set to test ralinepag in a broad patient population.

Joseph Schwartz

As part of an R&D day last month, Arena laid out the market opportunity for ralinepag with the help of key opinion leaders, as cited by Leerink’s Joseph Schwartz. KOLs see ralinepag as a meaningful player in the PAH field, and they expect the drug’s better pharmacokinetic profile could translate to a better efficacy than selexipag, which in itself was an improvement over United Therapeutics’ Orenitram, noted Schwartz.

Arena will now focus its resources on its experimental drugs etrasimod and olorinab that are being tested for various other disorders.

 

 


Image: Martine Rothblatt. AP IMAGES


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