- Arena Pharmaceuticals has paid $60 million for an option to acquire Aristea Therapeutics, a private biotech founded in 2018 to develop an experimental inflammatory drug discovered by AstraZeneca.
- Arena's option deal was accompanied by a $63 million Series B fundraising round for Aristea that included contributions from Fidelity Managment & Research, Aristea's original lead investor Novo Holdings and others. Arena added $10 million to the equity round, according to a statement.
- Aristea was one of a number of biotechs created when AstraZeneca decided to sell off promising non-core experimental drugs and focus on oncology, respiratory and metabolic diseases. Its main asset targets a rare, painful inflammatory disease that affects hands and feet.
The children of AstraZeneca have had some success. Viela Bio went public in 2019 to develop a drug now known as Uplinza and was bought by Horizon Therapeutics for about $3 billion last year. Albireo followed a similar path, making its Wall Street debut in 2018 and gaining approval last week for its own rare disease drug, called Bylvay.
Arena sees similar promise in Aristea's main project, a drug for a rare condition called palmoplantar pustulosis that causes painful swelling on the hands and feet. Dubbed RIST4721, the drug blocks a protein called CXCR2 involved in an inflammatory response from white blood cells called neutrophils.
Arena reviewed 200 experimental drugs in inflammation and immunology to add to its pipeline, and chose RIST4721 because of its "broad clinical utility" and an owner willing to share developmental risk in a deal, CEO Amit Munshi said in a conference call with Wall Street analysts.
The option enables Arena to buy the startup for an unspecified amount after Phase 2 results, he said. The companies plan on adding two other conditions — inflammatory bowel disease and a chronic skin disorder called hidradenitis suppurativa — to RIST4721's clinical program. Arena is already focusing on gastrointestinal diseases with an experimental drug called etrasimod.
Aristea has completed a small Phase 2 trial in palmoplantar pustulosis, although RIST4721 didn't meet the study's main goal of meaningfully reducing the number of pustules after four weeks when compared to a placebo. Arena executives weren't discouraged, however, noting that next Phase 2 trial will be bigger and have a longer follow-up period.
"Four weeks is super early to see as a clinical signal here," Munshi said.
Analysts covering Arena, meanwhile, supported the deal because of the small upfront cost Arena has paid for the chance to build up a pipeline of inflammation, dermatological and gastrointestinal drugs.
"Given [Arena's] expertise in both dermatology and gastroenterology, we view this collaboration (and option) not only as a de-risked move for the company, but also as a potentially lucrative venture, given the broad clinical application of RIST4721," SVB Leerink analyst Joseph Schwartz wrote in a July 27 note to clients.