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Why Arena Pharmaceuticals Stock Is Soaring Today

William White

Arena Pharmaceuticals stock was soaring Thursday on news of a license deal with United Therapeutics (NASDAQ:UTHR).

Why Arena Pharmaceuticals Stock Is Soaring Today

Source: Arena Pharmaceuticals

The deal between Arena Pharmaceuticals (NASDAQ:ARNA) and United Therapeutics has to do with the former’s ralinepag. Ralinepag is a drug for treating pulmonary arterial hypertension that has strong potential behind it.

The deal that has Arena Pharmaceuticals stock skyrocketing today is for the exclusive worldwide develop, manufacture and commercialize rights for ralinepag. This has United Therapeutics making an upfront payment of $800 million for those rights.

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The payments don’t just stop at the $800 million from United Therapeutics. There is also the potential for another $400 million in milestone payments. Plus, Arena Pharmaceuticals says it will get low double-digit tiered royalties on annual net sales of ralinepag.

Martine Rothblatt, Ph.D., Chairman and Chief Executive Officer of United Therapeutics, has this to say about the deal.

“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.”

News of the licensing deal sent Arena Pharmaceuticals stock soaring 22% as of noon Thursday, but it is down 10% year-to-date. UTHR stock was also up 6% as of noon Thursday, but is down 26% since the start of the year.

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As of this writing, William White did not hold a position in any of the aforementioned securities.

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