Arena Pharmaceuticals (ARNA) Stock: Climbing On Licensing Agreement

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Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) is having an incredibly strong start to the trading session in the pre-market hours this morning after the company announced that it has entered into a licensing agreement with United Therapeutics Corporation (UTHR). Of course, the news excited investors, sending the stock on a run for the top. Today, we’ll talk about the licensing agreement, what we’re seeing from ARNA stock as a result, and what we’ll be watching for ahead.

ARNA Gains On Licensing Agreement

As mentioned above, Arena Pharmaceuticals is climbing today after announcing that it has entered into a license agreement with United Therapeutics. The global license agreement surrounds the company’s Phase 3 investigational drug candidate by the name of Ralinepag.

Ralinepag was created by ARNA as a next-generation, oral, selective and potent prostacyclin receptor agonist. The treatment is currently in the development process for the indication of pulmonary arterial hypertension (PAH).

According to the terms of the agreement announced today, ARNA will grant UTHR exclusive, worldwide rights to develop, manufacture and  commercialize ralinepag. In exchange for these rights, United will pay Arena an up to $1.2 billion. This includes an upfront payment of $800 million as well as potential milestone payments that come to a total of $400 million. ARNA is also entitled to receive low double-digit tiered royalties on annual net sales of the treatment.

In a statement, Martine Rothblatt, Ph.D., Chairman and CEO at UTHR, had the following to offer:

We are very impressed with the clinical development plan and FDA coordination being managed by Arena… 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.

The above statement was followed up by Amit D. Munshi, President and CEO at ARNA. Here’s what he had to say:

We believe ralinepag has the potential to transform the treatment of PAH… We are thrilled to partner with United Therapeutics, based on their long-standing, deep commitment to the PAH community. This transaction represents a significant milestone in the development of ralinepag and will strategically position Arena to aggressively advance our best-in-class pipeline, anchored by etrasimod and olorinab, with the focus and resources essential for long-term success.

What We’re Seeing From The Stock 

When we start to dig into the market, we learn quite a few lessons. One of the first is that it’s important to keep a close eye on the news. After all, it’s the news that leads to moves. In the case of Arena Pharmaceuticals, the news was overwhelmingly positive. After all, this license agreement will bring $800 million through the door immediately. There’s another $400 million up for grabs in milestone payments and there’s a countless amount of money available in royalties under this agreement. So, it comes as no surprise that excited investors are pushing the stock upward in the market this morning. As is just about always the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (7:27), ARNA is trading at $39.00 per share after a gain of $6.48 per share or 19.93% so far today.

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on ARNA. In particular, we’re interested in following the story surrounding the newly minted agreement as well as the development of the rest of the company’s pipeline. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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