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Pharmaceutical giant Pfizer Inc. is entering the cannabis space via the $6.7 billion acquisition of Arena Pharmaceuticals, Inc. The two publicly-traded companies confirmed Monday that they have 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 existing cash on hand upon obtaining all necessary approvals.
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Arena Pharmaceuticals, based in San Diego, Cal., is a biotech company with one segment of its drug pipeline dedicated to cannabinoid-type therapeutics. The core of its cannabis biotech operations is the research and development of its investigational drug candidate called Olorinab (APD371). This is an oral full agonist of the cannabinoid receptor 2 that is being researched for the treatment of various symptoms, mainly concentrated on visceral pain connected with gastrointestinal illnesses.
Other parts of Arena’s drug pipeline are concentrated on non-cannabinoid drugs with the main focus on developing innovative potential therapies for the treatment of several immuno-inflammatory diseases. Arena’s portfolio includes diverse and promising development-stage therapeutic candidates in gastroenterology, dermatology and cardiology.
“The proposed acquisition of Arena complements our capabilities and expertise in Inflammation and Immunology, a Pfizer innovation engine developing potential therapies for patients with debilitating immuno-inflammatory diseases with a need for more effective treatment options,” stated Mike Gladstone, global president & general manager, Pfizer Inflammation and Immunology. “Utilizing Pfizer’s leading research and global development capabilities, we plan to accelerate the clinical development of etrasimod for patients with immuno-inflammatory diseases.” Etrasimod is Arena’s drug candidate for the treatment of immune-mediated and inflammatory diseases.
Amit D. Munshi, president and CEO of Arena said they are thrilled to be acquired by Pfizer, which recognized “Arena’s potentially best in class S1P molecule and our contribution to addressing unmet needs in immune-mediated inflammatory diseases. Pfizer’s capabilities will accelerate our mission to deliver our important medicines to patients. We believe this transaction represents the best next step for both patients and shareholders.”
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Big pharma entering cannabis space
This is not the first time one of the largest pharmaceuticals companies in the world has obtained an interest in a cannabis-related company. In February 2021, Jazz Pharmaceuticals bought cannabinoid drug company GW Pharmaceuticals, known for developing Epidiolex, the first FDA-authorized CBD medicine for treating children with severe forms of epilepsy. The medicine was first approved for the treatment of seizures connected to Lennox-Gastaut syndrome and Dravet syndrome, and last July for treating seizures related to tuberous sclerosis complex. Epidiolex sales generated more than $500 million last year.
In 2018, Canadian cannabis giant Tilray entered a supply and distribution agreement with medical marijuana with pharmaceutical giant Novartis AG. Another big pharma company that dipped its toes into cannabis was Johnson & Johnson when in 2017, it 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.
Pfizer’s shares traded 5.02% higher at $55.43 per share at the time of writing Monday morning.