Pfizer Signs Agreement to Acquire Arena Pharmaceuticals in a $6.7 Billion Deal, to Enter Cannabis Market
Pfizer Inc. (NYSE: PFE), the pharmaceutical and biotechnology giant, is entering the cannabis space via a $6.7 billion acquisition of Arena Pharmaceuticals, Inc. (NASDAQ: ARNA), the biopharmaceuticals company with a therapeutic focus.
The two publicly-traded companies confirmed on Monday that they had signed a definitive agreement under which Pfizer will acquire all outstanding shares of Arena for $100 per share in an all-cash transaction. Pfizer expects to finance the transaction with the existing cash on hand once they get all the necessary approvals.
Arena Pharmaceuticals is a biotech company based in San Diego in California. One part of its drug pipeline is centered on cannabinoid-type therapeutics. An important drug that is being developed by the company is Olorinab (APD 371) for the treatment of gastrointestinal pain resulting from Crohn’s disease or irritable bowel syndrome.
The drug is an oral agonist of the cannabinoid receptor 2. Studies have also shown that Olorinab reduces visceral hypersensitivity.
Other parts of Arena’s drug pipeline are focused on non-cannabinoid drugs with the main focus being on developing innovative potential therapies for the treatment of several immuno-inflammatory diseases. It is also developing drugs for treatment for problems related to gastroenterology, dermatology, and cardiology.
Mike Gladstone, global president & general manager of Pfizer Inflammation and Immunology, said that the proposed acquisition of Arena complemented Pfizer’s capabilities and expertise in Inflammation and Immunology.
He added that Pfizer planned to utilize its leading research and global development capabilities to accelerate the clinical development of etrasimod for patients with immune-inflammatory diseases.
Inflammation and Immunology is a Pfizer innovation engine developing potential therapies for patients with debilitating immuno-inflammatory diseases with a need for more effective treatment options and etrasimod is an oral drug being developed by Arena for the treatment of immune-mediated and inflammatory diseases.
Amit D. Munshi, president, and CEO of Arena, said they were thrilled to be acquired by Pfizer, which recognized Arena’s potentially best in class S1P molecule and its contribution to addressing unmet needs in immune-mediated inflammatory diseases.
He added that Pfizer’s capabilities would accelerate Arena’s mission to deliver its important medicines to patients and that the transaction represented the best next step for both patients and shareholders.
This is not the first time that one of the largest pharmaceutical companies in the world has obtained an interest in a cannabis-related company. In February 2021, the biopharmaceutical company Jazz Pharmaceuticals, based in Ireland, bought the cannabinoid drug company GW Pharmaceuticals, developer of epidiolex, the FDA-authorized CBD medicine for treating children with severe epilepsy.
The medicine was first approved for the treatment of seizures connected to Lennox-Gastaut syndrome and Dravet syndrome, and also for treating seizures related to tuberous sclerosis complex. Epidiolex sales generated more than $500 million last year.
In 2018, the Canadian cannabis giant Tilray entered into a supply and distribution agreement with Novartis AG, a multinational pharmaceutical corporation. In 2017, another big pharma company Johnson & Johnson accepted cannabis company Avicanna into its Innovation JLABS@Toronto – a 40,000 square-foot life science innovation center located in MaRS Discovery District.
The labs provide a flexible environment for startup companies pursuing new technologies and research platforms to advance medical care, without Johnson & Johnson taking an equity stake in these companies.