Covid vaccine maker Pfizer (PFE) said Monday it plans to acquire Arena Pharmaceuticals (ARNA) for $100 a share, in a deal worth an estimated $6.7 billion. The news sent Arena stock rocketing and gave a boost to Pfizer stock.
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The deal essentially doubles the value of Arena shares, and the stock quickly approached that level during midday trades on the stock market today. Arena shares soared 83.3% to 91.54 in recent action. Meanwhile, Pfizer stock, which recently broke out of a cup base, surged up and out of a buy zone. It gained 5.3% to 55.56.
In a press release, Pfizer and Arena said both boards have unanimously approved the deal. Arena is a clinical stage company developing drugs to treat immuno-inflammatory diseases. The areas include gastroenterology, dermatology and cardiology.
One key drug Arena is developing is etrasimod. The drug currently is undergoing Phase 3 testing to treat ulcerative colitis, Crohn’s disease and atopic dermatitis, a skin rash. It’s also in Phase 2 studies for the treatment of eosinophilic esophagitis. That’s a buildup of white blood cells in the esophagus. And Phase 2 studies are ongoing for etrasimod to treat alopecia areata, or patchy hair loss.
Pfizer Stock To Benefit From ‚Huge Unmet Need‘
„There remains a huge unmet need for patients with immuno-inflammatory diseases,“ Mike Gladstone, president of Pfizer’s inflammation and immunology unit, said in a conference call with analysts. He later added: „We need to continue to innovate to meet the needs of these patients.“
Further, Gladstone said etrasimod has the potential to be a „best-in-class“ drug in terms of effectiveness. He called it a key ingredient for the deal. He added it also brings value to holders of both Arena and Pfizer stock.
Pfizer said it planned to finance the transaction with existing cash. The deal is contingent on regulatory approval as well as approval from holders of Arena stock.
Please follow Russ Britt at @IBD_RBritt
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