Arena Pharmaceuticals soars on the $1.2 billion deal with United Therapeutics

Arena Pharmaceuticals (ARNA) inked a deal with United Therapeutics (UTHR) to sell and develop its Phase 3 investigational drug candidate ralinepag worldwide. Under the agreement terms, Arena Pharma will receive $800 million from United Therapeutics plus $400 million as additional milestone payments based on achieving certain regulatory events.

Shares of Arena jumped about 25% during Thursday’s forenoon session, while United Therapeutics stock rose about 6%.

Apart from the potential $1.2 billion payment, Arena will receive low double-digit tiered royalties on annual net sales of ralinepag. “We are very impressed with the clinical development plan and FDA coordination being managed by Arena,” said Martine Rothblatt, CEO of United Therapeutics.

Ralinepag is currently being tested by Arena for the treatment of pulmonary arterial hypertension (PAH). Arena discovered and developed ralinepag internally and it is not approved for any use in any country. It’s worth noting that last month, Arena’s partner Everest Medicines received investigational new drug approval for ralinepag from China Food and Drug Administration (CFDA).

United Therapeutics is confident about achieving FDA approval for ralinepag and the company expects the drug candidate to help more than 10,000 patients annually from the 2020s and well into the 2030s.

In September, United Therapeutics joined hands with MannKind (MNKD) to develop and commercialize the latter’s treprostinil, a dry powder formulation investigational product that is currently being evaluated in clinical trials for the treatment of PAH. Under the deal terms, the Silver Spring, Maryland-based company agreed to pay a total of $95 million, consisting of an upfront payment of $45 million and potential milestone payments of $50 million.

United Therapeutics, MannKind to co-develop pulmonary hypertension drug

Last week, Arena reported a loss of $0.70 per share on revenues of $3.6 million for its third quarter of 2018. Revenue consisted of $3.2 million from royalties and $0.4 million from collaboration.

Shares of Arena have gained 17% so far in this year and 51% in the past 52-weeks, while United Therapeutics shares have dropped 21% in the year-to-date period and 3% in the past one year.

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