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Arena (ARNA) Out-Licenses Rights to PAH Drug, Stock Up 22%

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Arena (ARNA) Out-Licenses Rights to PAH Drug, Stock Up 22%

Arena (ARNA) inks a deal to out-license global rights to its phase III candidate, ralinepag, to United Therapeutics. Shares of the company rally 22% following this news.

Arena Pharmaceuticals, Inc. ARNA announced that it has signed an agreement with United Therapeutics UTHR for out-licensing the global rights to ralinepag, its late-stage candidate for the treatment of pulmonary arterial hypertension (PAH). The candidate enjoys an orphan drug status for the given indication.

Per the terms of the deal, Arena is eligible to receive up to $1.2 billion including an upfront payment of $800 million, potential milestone up to $400 million and tiered low double-digit royalties on the net sales of ralinepag from United Therapeutics. Upon completion of the deal, United Therapeutics will gain the worldwide rights to manufacture and develop/commercialize this promising late-stage candidate.

The licensing agreement is subject to customary closing conditions and a pending clearance under the Hart-Scott-Rodino Antitrust Improvements Act.

Shares of Arena jumped 21.6% following the announcement of the deal on Thursday. In fact, so far this year, the stock has rallied 16.3% versus the industry’s decline of 20.6%.


 

Arena has two other mid-stage candidates in its portfolio, namely etrasimod (APD334; autoimmune diseases) and Olorinab/APD371 (pain and fibrotic diseases).

We would like to remind investors that during the third quarter of 2018, ralinepag advanced into the phase III development. In October 2018, the company announced positive long-term data from an open label extension of the phase II program, evaluating ralinepag on patients with PAH. Findings from the study showed that ralinepag led to durable long-term improvements in both pulmonary vascular resistance (PVR) and a 6-minute walk distance (6MWD) pertaining to PAH patients. The candidate also exhibited a favorable long-term tolerability profile.

Notably, United Therapeutics already has a strong position in the PAH market with four approved products in its portfolio for this indication. The company is making several acquisitions to strengthen its presence in the PAH/IPF market. In October, United Therapeutics closed the exclusive licensing and collaboration agreement with Mankind Corporation MNKD for developing a dry powder formulation of treprostinil to tackle PAH.

In September, United Therapeutics signed an exclusive license agreement with the privately held drug development company, Samumed LLC, for purchasing the North American rights to the latter’s idiopathic pulmonary fibrosis (IPF) drug candidate, SM04646. SM04646 is a WNTpathway inhibitor, currently being evaluated in phase I study for the treatment of IPF.

Arena Pharmaceuticals, Inc. Price and Consensus

Arena Pharmaceuticals, Inc. Price and Consensus | Arena Pharmaceuticals, Inc. Quote

Zacks Rank & Stock to Consider

Arena currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the healthcare sector is Vanda Pharmaceuticals Inc. VNDA, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Vanda Pharmaceuticals’ earnings estimates have moved 91.7% north for 2018 and 11.1% for 2019 over the past 30 days. The stock has soared 56.8% so far this year.

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