- United Therapeutics will pay up to $1.2 billion for exclusive, worldwide rights to a late-stage candidate for pulmonary arterial hypertension (PAH) from Arena Pharmaceuticals, the two companies announced Thursday
- The deal doubles down on United's investment in PAH drugs. Terms hold that the company will pay $800 million upfront, as well as $250 million more if Arena's therapy, called ralinepag, receives a PAH approval in the U.S. and $150 million for any indication approval in Japan or a range of European countries. Arena will also receive royalties on future sales in the low double-digits.
- Arena's chief executive said the deal underscores the value of ralinepag, while United's CEO predicted the drug will help more than 10,000 patients per year over the next couple decades.
More than 95% of United's revenue last year came from products designated to treat PAH, and this deal signals the pharma isn't planning to pivot away from that therapeutic area.
The company's current array of PAH treatments is headlined by three variations of treprostinil, a prostacyclin analogue. Those products, Remodulin, Tyvaso and Orenitram, accounted for roughly $1.2 billion of United's $1.7 billion revenue in 2017. The company also acquired exclusive rights in 2008 to Eli Lilly's Adcirca (tadalafil), a PDE-5 inhibitor therapy for PAH patients.
United's nearly singular focus on PAH carries its own risks as well, particularly with generic competition.
Adcirca lost regulatory exclusivity in May, and Mylan launched a generic version in August.
United also settled litigation with four generic drugmakers over a Remodulin copycat, allowing them to all enter the market by the end of year. Though the Silver Spring, Maryland-based company stated in a recent Securities and Exchange Commission filing it expects generic entry "sometime in 2018," so far none has launched.
In addition to generic competition are branded rivals. Johnson & Johnson and Actelion launched Uptravi (selexipag) in 2016, which has shown steady market growth and posted $482 million in sales through the first nine months of 2018. Additionally, J&J's Opsumit (macitentan), another PAH treatment option, notched $892 million through the first three quarters of this year.
Equity analysts have previously remarked that ralinepag is expected to compete with Uptravi, which could keep United competitive with J&J in PAH.
Earlier this year, United also paid roughly $200 million to acquire competitor SteadyMed, which was developing a drug-device combo of tresprostinil called Trevyent as a PAH treatment.
As for Arena, the deal with United brings in an immediate infusion of cash, which will help the company move along other pipeline candidates. CEO Amit Munshi called out etrasimod and olorinab in particular in a Nov. 15 statement.
Etrasimod is expected to start a Phase 3 trial in ulcerative colitis in the first half of 2019 and Phase 2 studies in Crohn's disease and atopic dermatitis in the latter half of next year. Olorinab, a cannabinoid-2 receptor agonist, is on pace to start Phase 2b trials next year for treating pain associated with Crohn's.
Arena's stock was up more than 20% when markets opened Thursday, while United opened flat and climbed up about 5% in morning trading.